Bitcoin dominance surged to a three-year high amid the weekend's market turmoil.

Per data from Coinglass, Bitcoin dominance—the ratio of Bitcoin's market capitalization to that of all cryptocurrencies—is currently 55.6989%, marking its highest level since April 2021.

At that time, the total market cap of all cryptocurrencies was $1.09 trillion, versus $1.2 trillion today.

"Current market conditions are significantly different from those in April 2021," Ruslan Lienkha, chief of markets at YouHodler, told Decrypt, explaining that today's market is "much more transparent and liquid, with greater market depth and increased trading volume, characterized by less wash trading and fewer price manipulations."

During the 2021 cycle, he added, new crypto investors entered the market through Bitcoin purchases.

"This year's main driver of Bitcoin's dominance is the rise of ETFs, which make Bitcoin accessible to traditional investors and institutions," Lienkha said. Those investors are drawn to its "unique status as a highly decentralized asset," he said, a feature that is "difficult to replicate compared to other blockchain projects."

Lienkha pointed to "segmentation of the crypto market," with Bitcoin and Ethereum increasingly integrated into the institutional and traditional finance space through vehicles such as ETFs. Altcoins such as meme coins are "creating their niche, driven by traders who are less interested in established cryptocurrencies," he added, predicting that the trend will continue.

Bitcoin faces macro headwinds

Bitcoin dominance has hit its current high water mark as crypto markets have been rocked by macroeconomic headwinds and geopolitical uncertainty that saw the price of Bitcoin slip below $50,000 Monday morning.

A combination of interest rate fluctuations coupled with rising tensions in the Middle East have stoked market volatility. Crypto markets are also grappling with the potential outcome of the U.S. presidential race, with Republican contender Donald Trump's polling numbers taking a hit as a revitalized Democratic party rallied around Vice President Kamala Harris' campaign.

Trump's overt crypto boosterism has won plaudits—and millions in campaign donations—from crypto executives. While Harris has reportedly made overtures to the crypto industry, her efforts to reset relations following the current administration's so-called "war on crypto" have been called "a tad late" by Bernstein Research.

Edited by Stacy Elliott.