Cryptocurrency, notably Bitcoin (BTC), has seen its dominance rate skyrocket in recent months as the banking sector in the United States has struggled. After hovering around 42% in Early March, the rate jumped to 49%, its highest level in 22 months, according to TradingView. This has been accompanied by a 35% plunge in the SPDR S&P Regional Banking ETF, a sign that Bitcoin is outperforming the broader market in response to the uncertainty.

The instability can be attributed to the failure of multiple U.S. banks and the dramatic fall of PacWest Bancorp's stock on Wednesday. Despite this, Federal Reserve chairman Jerome Powell reassures that the banking sector remains "sound and resilient."

Decentral Park Capital's Portfolio Manager Lewis Harland believes BTC's uptick amidst the chaos is proof of its trustworthiness as an anti-dollar play in the face of a weakening currency. He added, "You see outperformance of BTC within the crypto market when regional bank share prices collapse. This signals that BTC is the high-quality anti-dollar liquid play for investors as the crisis unfolds further."

The Federal Reserve opened the possibility of renewed liquidity when they raised interest rates by 25 basis points slightly on Wednesday, signalling a potential future depreciation of the U.S. dollar. Additionally, Bitcoin's increasing dominance, according to Harland, indicates a new market regime that could mean extended dominance of the cryptocurrency.

Bitcoin has risen by 48% since March 10, reflecting its behaviour during the 2013 Cyprus banking crisis. This shows the faith investors have in the crypto currency as a safe place to store their money while markets are in a state of flux. It's no surprise then that its market share has surged since the banking sector instability began, and it's possible that this could continue.



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