The decline in Bitcoin’s dominance suggests that the alt-season has begun, but more importantly, it could indicate a new bull run for Bitcoin.
The hypothesis was suggested by Cointelegraph, which notes how one of the lowest peaks of Bitcoin dominance was reached in June 2017 and was then the prelude for the bull run that led to records at the turn of late 2017 and early 2018.
By June 2017, Bitcoin’s dominance had fallen to 40% from 86% in February of that year. That was the era when ICOs were exploding, and projects with new cryptocurrencies were increasing. When looking at the graph, whenever Bitcoin’s dominance decreases, Ethereum’s usually increases. In June 2017, it reached 31%; basically, it was one step away from equaling Bitcoin.
Also, in 2021, the pattern seems to repeat itself: the increase in Bitcoin price has been accompanied by the rise in the price of many other altcoins that have progressively eroded Bitcoin’s dominance, which has gone from December 2020 to today from 70 to 40%. The market decline in recent weeks has led Bitcoin’s dominance to recover, returning to 45%.
In fact, this pattern seems to be repeating itself: every time there is a bull run, cryptocurrency projects that want to take advantage of the hype and often propose themselves as the real alternative to Bitcoin also increase.
Then comes a period of decline, and investors seem projected to sell everything but keep Bitcoin, increasingly a store of value.
Michael Saylor’s theory of Bitcoin’s dominance
Every time Bitcoin’s dominance wanes, a question seems to surface in the industry: will Bitcoin remain the queen of cryptocurrencies, or is it destined to relinquish its crown? Ethereum’s growth at the moment seems to be the only real threat, even though ETH’s current dominance has only touched 20% and remains half that of BTC, being far from its June 2017 peak.
Per Michael Saylor:
“Bitcoin is the dominant crypto asset network and if you want a long-duration asset that’s going to last for a hundred years, you need to completely decentralize it and make it permissionless and you need to also thermodynamically embed it in the firmament of the world”.
To say that Bitcoin has all the characteristics to remain the queen of the market, it also needs to solve some of its problems related to environmental impact.