Bitcoin Dominance Hits 4-Year High as Market Stalls Ahead of FOMC Meeting
Crypto markets are in a state of anticipation, with Bitcoin’s (BTC) dominance reaching a four-year high as traders rotate capital out of altcoins.
Bitcoin tightened its hold on the cryptocurrency market on Tuesday, with its dominance surging to the highest level in four years as traders moved funds into the anchor asset in preparation for tomorrow’s Federal Reserve policy meeting.
BTC remained stable around the $94,000-$95,000 range, gaining a modest 0.4% in the last 24 hours. This comes as the cryptocurrency has traded within a narrow range since the weekend, showing little major price movement.
In contrast, the broader CoinDesk 20 Index saw a 0.7% dip, with key altcoins such as Ethereum’s ether (ETH), Sui (SUI), Aptos (APT), and Polygon (POL) dragging down the overall index.
Traditional markets also showed signs of weakness, with both the S&P 500 and the Nasdaq closing 0.7%-0.8% lower, continuing to underperform compared to Bitcoin.
Despite the lack of dramatic price action, focus has shifted to Bitcoin’s increasing share of the overall crypto market. According to TradingView, Bitcoin Dominance has surpassed 65%, its highest level since January 2021, indicating that capital is consolidating into Bitcoin, which is seen as the most resilient asset amid ongoing macroeconomic uncertainty.
Joel Kruger, a market strategist at LMAX Group, described the current market environment as one of pause and expectation. “The cryptocurrency market has been largely stagnant since the beginning of the week, with prices entering a holding pattern as investors await a key catalyst,” he explained. “That catalyst could come from traditional markets, driven by updates on tariff impacts or from the Federal Reserve’s anticipated decision at the FOMC meeting on May 7.”
The Federal Reserve is widely expected to keep interest rates unchanged, according to the CME FedWatch Tool, but traders remain on edge for any change in Fed Chair Jerome Powell’s tone, which could shift risk appetite and impact market sentiment.
Bitcoin Volatility Surge Expected
With Bitcoin’s price action remaining flat in recent days, Vetle Lunde, Head of Research at K33, stated that the upcoming FOMC meeting could trigger significant volatility. He highlighted that Bitcoin’s short-term volatility is at an “abnormally compressed” level, with the 7-day volatility reaching its lowest point in over a year (563 days).
“Periods of low volatility in BTC tend to be brief,” Lunde said. “When price movements begin, they tend to be sharp, as leveraged positions unwind and traders are drawn back into the market.”
While a sharp drop is not expected, due to consistently negative funding rates for perpetual swaps, Lunde noted that such quiet periods historically present good buying opportunities for medium and long-term investors. He recommended a strategy of “aggressive spot exposure” moving forward.
