- Bitcoin price has been on a tear since the start of 2023.
- The recent uptick in BTC dominance has pushed it to two-year highs at 51.03%.
- Altcoins might have to take a backseat until the big crypto takes a breather.
Bitcoin price has increased 74% in the last six months, and recent developments suggest more gains are on the way. Specifically, the BTC dominance shows a bullish outlook while the short-term picture remains optimistic.
Also read: WisdomTree joins traditional finance's BTC race for Bitcoin ETF approval
What is Bitcoin dominance and why is it important?
Bitcoin dominance is the market capitalization or percentage of BTC as compared to the total market capitalization of the cryptocurrency industry. A spike in this index suggests that more investors are willing to invest in BTC as opposed to altcoins like Ethereum (ETH) or Ripple (XRP), among others.
As seen in the chart below, Bitcoin dominance has been on an uptrend since November 2022 and recently shattered through the 50% level, retesting two-year highs. These levels were last seen in April 2021, marking a shift in narrative among investors.
Bitcoin Dominance 1-week chart
The increase in Bitcoin dominance suggests that the interest has moved from risky altcoins to BTC, which is perceived as relatively safer. More often than not, this move is seen during the start of a new cycle or a bull run.
Considering the uncertainty over global macroeconomic conditions and crypto’s regulatory landscape in the US, it is likely that long-term investors are buying the dip.
Also read: Recent Bitcoin price crash triggers whales to scoop BTC at discount
What this means for altcoins?
A spike in Bitcoin dominance could mean two things: fresh capital is flowing into BTC or the unrealized profits from altcoins are moving back to Bitcoin. Therefore, an extrapolation from these conditions could mean that investors are selling their altcoins and moving capital back to Bitcoin.
These conditions could propel BTC higher while Ethereum (ETH), Ripple (XRP), Litecoin (LTC) and other altcoins could move sideways or slide lower.
While Bitcoin dominance has risen 18% since February, altcoin dominance has shed nearly 27%. This negative correlation is likely to bode ill for altcoins in the near future.
Bitcoin Dominance vs. others chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Bitcoin Weekly Forecast: BTC nosedives below $95,000 as spot ETFs record highest daily outflow since launch
Bitcoin price continues to edge down, trading below $95,000 on Friday after declining more than 9% this week. Bitcoin US spot ETFs recorded the highest single-day outflow on Thursday since their launch in January.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Solana Price Forecast: SOL’s technical outlook and on-chain metrics hint at a double-digit correction
Solana (SOL) price trades in red below $194 on Friday after declining more than 13% this week. The recent downturn has led to $38 million in total liquidations, with over $33 million coming from long positions.
SEC approves Hashdex and Franklin Templeton's combined Bitcoin and Ethereum crypto index ETFs
The SEC approved Hashdex's proposal for a crypto index ETF. The ETF currently features Bitcoin and Ethereum, with possible additions in the future. The agency also approved Franklin Templeton's amendment to its Cboe BZX for a crypto index ETF.
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy
Bitcoin (BTC) price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot Exchange Traded Funds (ETFs) in January and the reduced supply following the fourth halving event in April.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.