Bitcoin now represents a proportion of overall crypto market cap not seen for two and a half years.
The bitcoin rally that started in April caught almost everyone off-guard. And while many of the community have experienced previous parabolic rallies, this one is different.
This time, all eyes are on BTC, right from day 1. In the past, the alts have often been dragged along for the ride – some gaining significantly in BTC terms, even as BTC gains in USD terms. The result has been a kind of leveraged increase.
Take 2017, for example. A look at the Bitcoin Dominance chart shows what happened. The alts rally essentially had three stages. In the first, which started in March 2017, Bitcoin lost market share. Alts gained in BTC terms, going from around 15% of the market to over 60% just three months later. In the same period, bitcoin tripled in price from around $1,000 to $3,000. That’s (roughly) a 10x increase for alts.
Then there was a correction phase for the alts in BTC terms, as bitcoin’s rise accelerated. Over the next six months, Bitcoin Dominance rose back to 60%, as the #1 currency went into a parabolic rise. And then the final phase. Bitcoin topped out at $20k and money rushed into underpriced alts. By January 2018, Dominance was down to 33% as a result.
It’s been trending upwards ever since, the alts atrophying market share back to Bitcoin. And when bitcoin went parabolic earlier this year, it gained in Dominance too, just like in the second phase of the previous bull market.
Right now, Dominance stands at almost 70%. There’s no sign of it stopping yet, either. The direction of movement is very clear, and until the market has some sense that bitcoin’s long-term rise is ending, there’s no reason for money to go back into alts. Max Keiser has suggested that Dominance could hit 80% – close to its long term level, before the alts explosion of 2017. That would mean yet more pain for the alts, many of which are down at BTC lows, even if bitcoin’s rise has meant they maintain or gain dollar value.
The alts aren’t dead, like Keiser says, but many are on life support. It could be a long time, if ever, before they reach their all-time highs. Bitcoin is the king, and until it shows signs of stopping, that’s where the attention is. Given this rally is just a few months old, it could be a while to go yet.
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