Bitcoin lags behind US stocks and altcoins in the most recent rally

Bitcoin’s supremacy has declined as the leading cryptocurrency by market capitalization has underperformed alternatives.

The statistic used to estimate the proportion of the crypto market capitalization generated by BTC had been heading upward, but it now seems to be reversing course, which might portend more losses for the sector.

According to a research by Arcane Research, Bitcoin has been trading in a range between $21,000 and $22,000 with a 3 percent gain over the last week. BTC’s price is trading around $20,300 at the time of writing and may be poised to retest past support levels.

During the same time frame, both Ethereum (ETH) and Binance Coin (BNB) have gained at least 10 percent, according to Arcane Research. This is the first week that ETH’s price has been positive since March 28 when widespread selling pressure began.

In the meanwhile, since the price of Bitcoin fluctuates within a narrow range, U.S. stocks witnessed increases. In the previous week, the S&P 500 Index and the Nasdaq 100 recorded gains of up to 6 percent. Equities are taking a turn for the worst, which might portend greater losses in the cryptocurrency market.

Regarding the variables influencing Bitcoin’s price performance, Arcane Research published the following: Bitcoin’s relative underperformance compared to stocks and altcoins in this highly connected environment is likely due to the developing contagion effects associated with the collapse of UST and 3AC (…).

The aftermath of these events has presented obstacles for centralised lending institutions. As a result of being compelled to liquidate assets in order to satisfy outstanding debt commitments, many have become forced sellers. Added by Arcane Research:

BTC’s potential for a major rebound is limited by the market’s vigilance over the resolution of the existing imbalances.

Why Bitcoin Could Possibly Outperform Stocks

Bitcoin has been advancing in line with conventional stocks, but in the second half of 2022, it may outperform them. The downward trend is mostly the result of the aforementioned issues plus a change in monetary policy by the U.S. Federal Reserve (Fed).

The banking institution is increasing interest rates in an effort to reduce inflation. As deflationary pressure arises, according to Senior Commodity Strategist Mike McGlone, Bitcoin may see another bounce in the coming months.

Too Hot Stocks Versus Bitcoin’s Maturity? Inflation is being eroded at a fast speed by plunging risk assets in the first half of the year, which may result in the reemergence of pre-pandemic deflationary pressures in the second half. Gold, Bitcoin, and US Treasury long-bonds might be the primary winners of this scenario.

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