Bitcoin surged to a 16-month high of $13,000 on Wednesday, prompting traders to strategise over the potential of a long-awaited cryptocurrency bull market.
While seasoned traders will be looking to hedge via Bitcoin options, some have taken a unique approach by betting on a derivative of the Bitcoin dominance chart.
What typically happens when Bitcoin rallies to the upside is that altcoins are sold off as traders want to maximise exposure to BTC.
This has been clear over the since the start of September, with Bitcoin’s dominance rising from 56.67% to 61%.
Bitfinex Derivatives offers a perpetual contract that allows traders to capitalise on Bitcoin dominance alongside its other products.
This means that traders who may in a long position on altcoins, can hedge their exposure by also opening a long position on the Bitcoin dominance contract.
Discussing the recent market rally, Bitfinex CTO, Paolo Ardoino, said: “Bitcoin is once again proving to be the king of crypto.
“Bitcoin’s dominance is spearheading crypto’s inexorable path towards mass mainstream adoption. PayPal’s decision to support Bitcoin represents yet another milestone. While on the institutional side, we’re seeing more and more hedge funds willing to put some of their reserves into Bitcoin.”
As a result, the Bitfinex dominance contract has experienced an expected uptick in volume, with it reaching up to $300,000 per day over the past month.
For more news, guides and cryptocurrency analysis, click here.