Bitcoin's dominance has been accelerating rapidly ahead of the upcoming meeting of the United States Federal Reserve's Federal Open Market Committee (FOMC), which is scheduled for early Thursday morning Indonesia time.

According to data from Refinitiv, on Wednesday, May 7, 2025, at 07:08 AM WIB, Bitcoin’s price surged by 2.36% to reach US$96,892. During the intraday trading session, Bitcoin even touched a high of US$97,083.

This price rally is not new, as Bitcoin has been rebounding since April 8, 2025, when its value had fallen below US$80,000.

The appreciation in Bitcoin’s price has also been accompanied by an increase in Bitcoin Dominance—surpassing 65%, the highest level since January 2021. This rise reflects a capital shift from altcoins into Bitcoin ahead of the significant FOMC meeting set for Wednesday, May 7 (U.S. time), or Thursday, May 8 in Indonesia.

According to coindesk.com, Joel Kruger, an analyst at LMAX Group, stated that the crypto market is currently in a state of anticipation, with investors waiting for major catalysts from traditional markets such as the outcome of the FOMC meeting or updates on the economic impact of tariffs.

Vetle Lunde of K33 Research pointed out that Bitcoin's short-term volatility is currently “highly compressed,” with the 7-day average reaching its lowest level in the past 563 days.

Lunde cautioned that such periods of low volatility are often followed by sharp spikes, as leveraged positions are liquidated and traders re-enter the market. He recommended aggressive spot exposure, noting that historically, periods with negative perpetual swap funding rates often present attractive buying opportunities for medium- and long-term investors.

"This kind of low volatility regime in BTC usually doesn’t last very long," Lunde commented. "Sharp volatility explosions typically follow this kind of calm phase once the price begins to move, driven by the liquidation of leveraged positions and increased trading activity."

For context, Bitcoin Dominance is a metric that indicates the market share of Bitcoin relative to the total market capitalization of all cryptocurrencies. It is calculated by comparing Bitcoin’s market cap with the combined market cap of all digital assets.

In simpler terms, this figure represents how dominant Bitcoin is in comparison to other cryptocurrencies such as Ethereum, Solana, and others.

When Bitcoin dominance increases, it signals that investors are allocating more of their capital into Bitcoin rather than altcoins. This scenario often occurs during periods of uncertainty or market downturns, where Bitcoin is seen as the most stable crypto asset.

Conversely, a decline in Bitcoin dominance indicates that altcoins are starting to gain traction and claim a larger share of the market. This trend is commonly referred to as the “altcoin season,” a period where altcoins experience significant price gains and sometimes outperform Bitcoin in the short term.

A drop in dominance can be seen as a sign of increased market optimism, where investors are willing to take on higher risk.

In summary, Bitcoin dominance serves as a crucial indicator for analyzing the direction of the crypto market. Many analysts and traders rely on it when crafting investment strategies, as its fluctuations provide insight into investor sentiment and behavior within the digital asset ecosystem.