Bitcoin’s Market Dominance Grows Ahead of FOMC, Analyst Predicts Volatility Surge on the Horizon

Bitcoin Dominance Reaches 4-Year High as FOMC Meeting Approaches, Volatility Expected to Spike

Bitcoin’s dominance in the cryptocurrency market has soared to its highest point in four years as investors brace for a potential volatility surge following the upcoming Federal Open Market Committee (FOMC) meeting.

With Bitcoin (BTC) holding steady around the $94,000-$95,000 mark, its dominance has increased to over 65%, a level not seen since January 2021. This surge comes as the market awaits important updates from the FOMC scheduled for May 7. The leading cryptocurrency has shown a modest 0.4% gain in the last 24 hours, but has largely remained in a tight range, signaling a moment of market consolidation.

Meanwhile, altcoins have experienced downward pressure, with the CoinDesk 20 Index falling 0.7%, mainly due to declines in Ethereum (ETH), Sui (SUI), and Aptos (APT). As a result, a larger share of capital is being funneled into Bitcoin, often seen as a stable asset amid global uncertainty.

Traditional markets also showed weakness, with U.S. stocks such as the S&P 500 and Nasdaq both dropping by about 0.7%. This underperformance has led many to seek refuge in Bitcoin, reinforcing its position as a stronghold in uncertain times.

Joel Kruger, market strategist at LMAX Group, pointed out that the market is holding its breath as it awaits the FOMC’s policy stance. “Bitcoin’s relative stability may reflect the calm before a storm,” said Kruger. “Once the Fed signals its next move, we could see heightened volatility across all markets, including crypto.”

Potential Surge in Bitcoin Volatility

Vetle Lunde, Head of Research at K33, remarked that Bitcoin’s current period of low volatility is a precursor to potential sharp price movements. “Bitcoin has been experiencing an unusually low volatility, with its 7-day volatility reaching a multi-year low,” Lunde explained. “Such periods of stagnation are often followed by swift price action, especially as leveraged positions get unwound.”

Despite a lack of significant price changes, Lunde believes that the quietness in the market presents an opportunity for long-term investors to increase their exposure to Bitcoin. “The lull in volatility doesn’t last long, and with major events like the FOMC meeting on the horizon, a new market cycle could soon begin,” he added.