Decentralized finance's dominance — or DeFi's market capitalization as a percentage of the global cryptocurrency market cap — hit fresh lows not seen since last July.

The Block's DeFi Dominance data dashboard illustrates a wider trend by summing the market capitalizations of DeFi tokens for Uniswap, Aave, PancakeSwap, Maker, The Graph, Thorchain, SushiSwap, Compound, Yearn.finance, Synthetix, Bancor, 0x, UMA, Curve, Nexus Mutual, 1inch, Balancer, Serum, Alchemix and Perpetual Protocol.

The metric currently shows a dominance of 4.1% after hitting as low as 4.05%. The last time DeFi dominance was that low was on July 12, 2022 — when its cryptocurrency market share was around 4.02%.

Bitcoin in a western banking crisis

DeFi's most recent declines in dominance coincide with increased market-share gains for bitcoin this year. Over the past 90 days, the first and foremost cryptocurrency has increased its dominance from 37.93% to 44.41%.

Primary drivers for bitcoin's retaking market share include worries about a purported western banking crisis — promoting the idea for some that crypto's gold standard is, like physical gold, a potential safe-haven asset. 

"There is nothing like a banking crisis in the United States... to remind you that our systems are fragile," Galaxy Digital CEO Mike Novogratz said during his firm's recent fourth-quarter earnings call, adding: "We have been on a debt orgy, literally gorging ourselves with cheap money for years."

“Crypto was, in lots of ways, created for this point," Novogratz said.

XRP rising from Ripple's legal battle

Outperforming bitcoin, even, has been XRP — a potential signal of how investors feel regarding a pending lawsuit brought by the U.S. Securities and Exchange Commission against associated payments firm Ripple.

"Google Trends data confirms that users searching for 'XRP' are highly interested in the case's outcome," said Strahinja Savic, head of data and analytics at FRNT Financial, adding: "It's unclear what specifically is causing the optimism around XRP right now. However, there is significant focus on crypto regulation. The SEC's case against Ripple may be gaining increased attention as a result, amplifying optimism from [Ripple CEO Brad] Garlingouse and figures close to the case."