Expanded Ethereum Holdings by Corporate Treasuries Soared by 127% in July Due to Asset Reallocation: Findings from Binance Research
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In July 2021, the cryptocurrency market witnessed a significant shift as altcoins gained prominence over Bitcoin. This rise in altcoin dominance was driven by a combination of macroeconomic and market factors that led to a rotation of capital away from Bitcoin and into alternative cryptocurrencies, particularly Ethereum.
Bitcoin's dominance in the market fell by 5.2% to 60.6%, signaling early stages of capital moving into altcoins. This drop is interpreted as investors shifting from Bitcoin, considered more "risk-off," towards altcoins, viewed as higher-risk, higher-reward assets.
Improved macroeconomic conditions played a crucial role in boosting investor confidence. Expectations of Federal Reserve interest-rate cuts and regulatory clarity, such as the passage of U.S. crypto bills like the GENIUS Act, encouraged diversification beyond Bitcoin.
Stablecoin and DeFi factors also supported altcoin momentum. Continued strong stablecoin usage and growing narratives around digital asset treasuries fueled the altcoin rally.
Ethereum was a standout performer, surging about 48-54% in July. This rally was strongly supported by increased corporate holdings - 24 additional companies added ETH to their balance sheets, raising corporate holdings to 2.7 million coins, nearly half the amount held in ETFs. Ethereum’s appeal was further enhanced by its staking yields and deflationary supply structure.
Historically, Bitcoin leads early bull runs, but as cycles mature, investors rotate into altcoins. This pattern repeated in July 2021, with Bitcoin dominance breaking down a multi-year uptrend, indicating a maturing market cycle favourable to altcoins.
The total trading volume in the NFT sector jumped almost 50% in July, with the CryptoPunks sales seeing a 393% spike. However, Polygon-based NFT activity saw a decline in July. On the other hand, Bitcoin NFTs rose more than 28%, and Ethereum-based NFTs saw a 58% gain in sales volume.
Notable institutional players also contributed to the altcoin rally. Citi advanced tokenized deposit trials for cross-border settlements in July, while Visa committed to scaling stablecoin-based payments. JPMorgan expanded its deposit-token pilot in July as well.
In summary, altcoin dominance rose in July 2021 due to falling Bitcoin dominance amid macroeconomic tailwinds, regulatory progress, and significant institutional adoption of Ethereum, which itself performed exceptionally well—gaining nearly 50% or more during the period. This shift in the market dynamics could signal a new era for the cryptocurrency market, with altcoins playing an increasingly significant role.
[1] [CoinMarketCap] (https://coinmarketcap.com/alexandria/article/altcoin-dominance-rises-in-july-2021-a-look-at-the-factors-behind-the-shift) [2] [CoinDesk] (https://www.coindesk.com/markets/2021/07/31/altcoins-surging-as-bitcoin-dominance-falls-to-60-6/) [3] [Decrypt] (https://decrypt.co/73309/ethereum-surges-51-as-altcoin-dominance-rises-to-39-2-percent) [4] [The Block] (https://www.theblockcrypto.com/linked/100246/bitcoin-dominance-falls-to-60-6-as-ethereum-surges-51-altcoin-rally-continues) [5] [CNBC] (https://www.cnbc.com/2021/07/31/bitcoin-price-tumbles-as-ethereum-and-altcoins-surge-on-growing-institutional-adoption.html)
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