Bitcoin crossed the US$50,000 mark overnight Asia time for the first time since the September sell-off and has continued to gain ground ever since, trading at US$51,491 at press time, according to data from CoinMarketCap. This is the result of a weeklong tear for the world’s largest cryptocurrency, gaining more than 25% over that time and leading a market-wide run where many altcoins are seeing seven-day growth in the double digits as well.

It is the second time the world’s largest cryptocurrency exceeded US$50K in price since the Chinese government’s crackdown on Bitcoin mining in May saw the entire crypto market tumble. Jonathon Miller, Australian managing director of crypto exchange Kraken, in an interview with Forkast.News called the price point the “new benchmark” for the currency as Bitcoin had overcome several headwinds throughout the year.

“The $50K level is a really interesting marker; it’s a line in the sand,” Miller said. “We’ve returned to this level now. Bitcoin climbing back steadily to the 50K level is a sign of resilience in terms of the long-term trend for the price of the asset.”

Unlike the previous significant crackdown in May, which targeted the Bitcoin mining sector, China’s move to ban the trading of digital assets outright within the country had a relatively short-lived impact on Bitcoin’s price and the market more broadly. While Miller says this is an unfortunate development for the Chinese people, he believes Bitcoin’s quick return to the US$50K mark demonstrates the ban in the world’s most populous country is now priced into the market.

Miller attributes this to fundamental differences between the two instances. The ban on mining impacted fundamental elements of Bitcoin by wreaking havoc on its hashrate — the indicator of the number of validators in the network. But as miners found new homes, often in countries with cheap and/or renewable sources of energy, the hashrate returned and the price recovered in time. Conversely, Miller regards the main impact of this most recent ban as being on market sentiment, and as such, the market recovered more quickly.

“Resilience has been shown in the more recent news around traders being blocked from China,” Miller said. “We’ve heard that many times before. The growth in numbers for users in the rest of the world is offsetting the kind of negative story. It really is a tragedy for the Chinese people more than a tragedy for the crypto world.”

Other reasons for the run

Of course, as well as these regulatory headwinds, there have also been cases of good news for Bitcoin, from ongoing institutional adoption to El Salvador becoming the first country in the world to adopt Bitcoin as legal tender last month. But industry watchers say there are other events in the pipeline for Bitcoin that could be driving up the price.

“There’s been speculation that the recent Bitcoin price growth is coming as a result of anticipation for a Bitcoin Exchange Traded Fund in the U.S.,” Jeff Yew, CEO of Monochrome, Australia’s first fund to offer institutional-grade exposure to Bitcoin, told Forkast.News. While other countries have already launched Bitcoin ETFs — notably neighboring Canada, which also hosts Ethereum ETFs — the U.S. Securities and Exchange Commission is yet to approve one, and applications from Valkyrie, VanEck and WisdomTree have all faced delays.

“However, experts have suggested that the decision is likely to be made at the end of the year or in Q1 2022,” Yew added.

Speaking with Forkast.News in July, Valkyrie CEO Leah Wald said the delays for the applications are to be expected, especially given that the rest of the agencies in the country are still trying to figure out to best define cryptocurrencies. “I think that the SEC has been pretty clear from the onset of all the Bitcoin ETF applications, even back in 2017, about concerns around custody,” Wald said. “Now, we finally do have true institutional-grade custodians, but there are still stress tests happening in the market.”

Looking beyond the sentiment of Bitcoin hitting the US$50K mark, however, Yew says a “more interesting” development is the fact that the amount of BTC held in corporate treasuries over the circulating supply has doubled over the past 12 months, and is now sitting at 8.86%. Bitcoin analytics site has the total supply of Bitcoin sitting in such treasuries as 1.668 million out of the 18.836 million in circulating supply.

“What this illustrates is the growing confidence from professional investors and institutions in Bitcoin as an investable asset class,” Yew said, “and investment managers like Monochrome are providing an avenue for these investors to gain exposure to the asset in a safe and regulated way.”

Bitcoin’s dominance

A curious feature of this current run, however, is that while Bitcoin’s price is steadily climbing, its market dominance has continued to fall ever since last breaching the 50% mark in late July, according to CoinMarketCap. At this stage, BTC was trading roughly around US$40,000, and while its price has fluctuated — though steadily increased — over this time, its dominance has continued to fall. Bitcoin’s market dominance is a measure of its total share of the market. As the world’s first cryptocurrency, that was 100% once upon a time, and as it fluctuates as the market evolves and grows, it is seen as a useful metric for determining market trends.

During this same period, Ethereum’s share of market dominance has remained quite stable — between the 17% to 19% mark — which Miller suggests is evidence of the growing number of use cases for the world’s second-largest network.

“The rise of [decentralized finance] and the proliferation of the applications and opportunities in that space have put a huge amount of demand on [Ethereum] and as a result on the price of Ethereum,” Miller said. “I think in some respects back in July — climbing out of that correction that we saw from the all-time highs — Ethereum drove a lot of that, a lot of that recovery because of the real-world adoption of decentralized finance protocols.”

One of the smaller networks to have shown real growth in market dominance this year has been Solana, which after starting the year with a market dominance of just 0.01%, it is now sitting at 2.13% of the total market, following an explosive entry into the crypto top 10 in August. Amid a flurry of excitement following the successful minting of its “Degenerate Apes non-fungible token series and transaction speeds roughly 2,000 times faster than Ethereum, Solana gained over 450% within a month to reach an all-time high of $212.26 in early September.

Solana recovered to a month-long high of US$176.51 at the start of the week but has since begun to trend downwards, trading at US$156.01 at press time.

“These altcoins … are just as vibrant as the Bitcoin story in different ways,” Miller said, “and so we’re seeing the growth of the market, but that does not necessarily mean you will see Bitcoin dominance as a central narrative.”