The U.S. stock market fell under intense pressure during the month of October while Bitcoin continues to hold support above $6,000. The Dow Jones Industrial Average was down over 8% from its previous all-time high during October but is now down by 5%. This is in stark contrast to Bitcoin as the crypto asset holds steady around $6,400 above major support of $6,000. This could be a sign that investors are using the cryptocurrency as a hedge to their portfolios as equities continue to get hit amid a highlighted earnings season.
Bitcoin’s dominance by market cap is perhaps where we need to look to understand why we are holding the support and not capitulating to the much talked about $4,500 level. Looking at the percentage of the total market cap chart on coinmarketcap.com, Bitcoin dominance stands at 53.74%. Almost back to 60% and the highest level since December 7, 2017, when Bitcoin was trading near all-time highs between $17,000 and $19,500.
It is also important to note the correlation between Bitcoin dominance and altcoins. Many of the highly popular alternative coins are down over 85% through October 2018. This may be another contributing factor to Bitcoins climbing market cap dominance, as altcoins continue to sell off (many now below ICO price). Investors are fleeing to the “safer” crypto asset that is Bitcoin . Perhaps, traders are choosing to wait out the bear market while converting their once loved altcoins into Bitcoin and holding tight. It appears we have an obvious divergence between the market cap of Bitcoin and that of the altcoin market. Looking at the chart on coinmarketcap.com, the Bitcoin market cap is increasing as the altcoin one decreases. Will this change?