Bitcoin Dominance Grows But On-Chain Activity Shifts To Ethereum And L1 Networks – Insights

Bitcoin (BTC) is trading below key support levels after massive selling pressure hit the market, fueling fear and uncertainty among investors. Since the start of March, BTC has lost over 19% of its value, triggering concerns that further downside may be ahead. The broader crypto market and U.S. stock market have both suffered as global trade war fears and volatile macroeconomic conditions continue to shake investor confidence.

Despite the downtrend, Bitcoin’s market dominance has been rising steadily since 2022, marking one of the longest periods of sustained growth in its history. This dominance reflects BTC’s resilience compared to altcoins, as investors turn to BTC during periods of uncertainty. However, while Bitcoin’s share of the market grows, active user engagement continues to decline.

On-chain data shows that Ethereum (ETH) and The Open Network (TON) have seen significant growth, with more on-chain activity shifting to these networks. As alternative Layer 1 blockchains gain traction, Bitcoin faces competition for transaction volume and user engagement. With BTC struggling to hold key levels, the coming weeks will be crucial in determining whether BTC can reclaim momentum or if further losses are ahead.

Bitcoin Downtrend Continues As Market Dominance Grows

Since late January, Bitcoin has been in a persistent downtrend, with fear and uncertainty driving the market lower. Many investors now believe the bull cycle is over as BTC struggles to hold key support levels, setting lower targets with each new wave of selling pressure. Bulls have lost control of momentum, and there are no clear signs of strong support, leaving the market nervous and pessimistic about the short-term outlook.

Despite the ongoing correction, Bitcoin continues to outperform altcoins, maintaining its dominance in the crypto market. Compared to riskier assets, BTC is still seen as a safer bet, especially as capital rotates away from high-risk tokens. Insights from IntoTheBlock on X reveal that Bitcoin’s market dominance has been on a steady rise since 2022, marking one of the longest sustained growth periods on record. This suggests that, even amid selling pressure, BTC remains the leading force in crypto, with investors showing preference for BTC over alternative assets.

However, while Bitcoin’s market dominance is rising, its share of active users is declining. More on-chain activity is shifting toward Ethereum and other Layer 1 networks, such as The Open Network (TON), indicating that users are exploring alternative ecosystems for DeFi, NFTs, and payments. This trend raises questions about Bitcoin’s long-term utility beyond its role as a store of value.

With BTC trading at a critical level, the coming weeks will determine whether Bitcoin can stabilize and recover or if the current downtrend will continue, testing even lower support levels.

Bitcoin is trading at $82,500 after failing to reclaim the 200-day moving average, a crucial technical level that often defines long-term trend direction. With BTC unable to push higher, bearish momentum continues to build, making it harder for bulls to regain control. Every day BTC remains below this indicator, bears gain more strength, increasing the risk of further downside pressure.

For bulls to initiate a recovery, BTC must hold current demand levels and push above $86,000, which aligns with the 200-day exponential moving average (EMA). A break and hold above this zone would signal renewed bullish momentum, potentially opening the door for a broader market recovery. However, without a strong push above resistance, BTC could remain stuck in a downtrend, making a return to higher price levels more difficult.

If Bitcoin loses the critical $80,000 mark, it would be a dramatic shift, likely triggering another wave of selling pressure. This scenario could accelerate BTC’s decline, potentially sending it toward lower demand zones, further extending the current bearish trend. The next few trading sessions will be crucial in determining Bitcoin’s next major move.