Bitcoin's dominance reaches its highest since early 2021, potentially signifying ongoing struggles for altcoins.
Bitcoin's clout in the crypto world has been steadily growing since dropping to 40% in November 2022. Hitting the 64% mark in April this year means Bitcoin accounts for nearly two-thirds of the entire crypto market cap. While some are waiting for the altcoin season to begin, others claim this cycle is different, and we might not encounter an altcoin season ever again.
What's Up with Bitcoin Dominance?
Bitcoin dominance is a metric showcasing Bitcoin's share in the overall cryptocurrency market capitalization. Back in the day when Bitcoin was the only cryptocurrency, it had a 100% share. As other cryptos emerged, Bitcoin's dominance took a hit. However, Bitcoin has always been the priciest crypto, so it took a few years for the rest of the crypto market to gain a significant share.
2017 was a transformative year, marked by the rise of Ethereum-based tokens and an ICO boom that dragged Bitcoin dominance from 96% down below 40% by 2018. From 2018 to 2020, Bitcoin's share was volatile, moving in high amplitude. The first half of 2021 saw a drop in Bitcoin dominance from 70% to around 40% due to the rise in the DeFi market and the NFT market surge, with most NFTs built on Ethereum and BNB Chain.
While it might seem the Bitcoin dominance chart reflects the market state, it's also an indicator used by traders and investors to gauge market sentiment and adjust their strategies. Declining Bitcoin dominance is often seen as a sign of a bull market, as investors are eager to experiment with altcoins. Conversely, high Bitcoin dominance is usually seen as a sign of a bear market, a time when investors prefer the safe haven of Bitcoin over riskier altcoins. However, some experts think this cycle will change altcoins' role in the crypto market.
Bitcoin and the Altcoin Market: A Closer Look
In an interview with Crypto.news, CoinW CSO Nassar Achkar claims that this cycle is different. Instead of buying the dip to sell high, investors buy Bitcoin whenever they can and never sell it. Moreover, fewer people are interested in swapping Bitcoin for altcoins. The idea of Bitcoin as a reserve currency has been boosted by governments and corporations and is gaining traction among retail investors.
Governments and corporations themselves are becoming massive Bitcoin buyers, spending millions to acquire bitcoins. These new funds are staying in Bitcoin, as few sell it. This dynamic can account for the rising Bitcoin dominance. Bitcoin is continuously pumped with new inflows, while altcoins' share is gradually fading away.
Some believe the altcoin season is just around the corner. While the logic of those who suggest altcoins will no longer thrive may seem sound, faith in altcoins isn't misplaced. The crypto market is unpredictable, and new trends like DeFi or NFT booms in the past may spark a new altcoin season. It all depends on the appeal and potential of new technologies.
"Bitcoin, not crypto," is a mantra particularly popular among Bitcoin maximalists. Scott Melker, the host of the Wolf of All Streets, has compared investors' behavior to a washing machine, where value circulates endlessly between Bitcoin and altcoins as new funds are poured in.
In the view of Benjamin Cowen, CEO of The Cryptoverse, Bitcoin dominance is 69% if we exclude stablecoins. When asked about the altcoin season, he shared a chart indicating that the altcoin/BTC pairs should decline even more before they bounce back and start growing.
Only time will tell if the altcoin season will occur, but one thing's for sure: Bitcoin is dominating the conversation right now. It's not casting a shadow on a sudden gold price rally, and who knows, maybe in 2028, there will be a new word that will change everything, and Bitcoin dominance will drop below 50% again like it did in 2022.
- The Bitcoin dominance, a metric demonstrating Bitcoin's share in the entire cryptocurrency market capitalization, has reached 64%, suggesting it accounts for nearly two-thirds of the crypto market.
- Bitcoin's dominance took a hit when other cryptos emerged, but it remained the priciest crypto, resulting in a gradual increase in share over time.
- In 2017, the rise of Ethereum-based tokens and an ICO boom caused Bitcoin dominance to drop significantly, down to 40% by 2018.
- From 2018 to 2020, Bitcoin's share was volatile, moving in high amplitude due to the rise in DeFi and NFT markets.
- CoinW CSO Nassar Achkar claims that the current cycle is different, with investors buying Bitcoin and not selling it, and fewer people interested in swapping Bitcoin for altcoins.
- Some believe the altcoin season is imminent, but the logic suggesting altcoins will no longer thrive may not hold true as the crypto market is unpredictable.
- Scott Melker, the host of the Wolf of All Streets, compares investors' behavior to a washing machine, where value circulates endlessly between Bitcoin and altcoins.
- In 2025, it's possible that a new metric or technology could emerge, causing Bitcoin dominance to drop below 50% again like it did in 2022.
