Key Takeaways:
In an interview with The David Lin Report on Friday, well-known crypto analyst Benjamin Cowen projected that Bitcoin’s market dominance could reach 60% by the end of the year. However, he doubts whether its dominance will return to levels previously observed in December 2020, when the price of the world’s most valuable cryptocurrency surged by a remarkable 220% over a period of three months.
Bitcoin’s Market Dominance Expected To Reach 60% By The End of 2024
Bitcoin has shown incredible resilience and growth over the years, tending to bounce back often stronger from market lows. While Cowen highlighted that the cryptocurrency could revisit its dominant levels from the past, it might not replicate the standards set during previous bull runs, particularly 2021’s altcoin surge.
He explained that during major altcoin seasons, the ratio of Bitcoin’s market capitalization to the entire crypto market tends to decline but slowly gets back to its previous level following a “breakdown”.
Cowen believes there is more room for Ethereum (ETH) and other cryptocurrencies in the market this time around and expects Bitcoin to make that “final move” towards 60% market dominance as early as next month or as late as December.
According to data by TradingView, Bitcoin currently dominates 57.36% of the market, up 4.25% since July 18, and from the all-time low of 39% in late 2022. This gradual rise indicates a steady shift in market preferences, as prominent altcoins are starting to play an influential role. Cowen says these digital currencies could significantly impact Bitcoin’s dominance, preventing it from reaching the 70% mark from three years ago.
Nevertheless, the analyst says that a 60% dominance mark remains a plausible target by the end of this year.
Investor Sentiment Shift Towards Altcoins A Major Reason Behind Dip In Bitcoin Market Dominance
Pseudonymous crypto trader Kaleo echoed Cowen’s statements about BTC moving towards higher market dominance levels. However, in an X post from August 9, he told his 643,700 followers that Bitcoin may have already hit its peak dominance figure for the year when it was around 57.50%. He thinks this is a good sign because the anticipated 60% level could be realized without causing significant disruptions in the market, which in his words would be “painful” to investors.
Kaleo also noted that the real altcoin season, or “altseason”, will begin when the market dominance of BTC falls below 50%. The metric is key to traders because they often view Bitcoin’s dominance peaking as a signal to sell the cryptocurrency and shift capital into other leading digital assets, like Ether or Solana (SOL).
In December 2020, Bitcoin market dominance reached a whopping 70.23% before its price surged by 220% to $61,283 just four months later in March 2021. In 2019, its dominance peaked slightly above 71%, mainly because the market capitalization of stablecoins was significantly lower during that time.
Cowen has advised investors to combine Bitcoin dominance with that of USD-denominated stablecoin Tether USD (USDT) to calculate their “flight to safety dominance” – a financial phenomenon where investors shift their investments from riskier assets to safer ones during periods of economic uncertainty to market stress.
In the interview, he noted that the combined figure now stood at about 63%, similar to the level observed in June 2019, right before the US Federal Reserve started to cut interest rates on the dollar. Currently, the BTC and USDT combined market dominance stands at about 63.07%.
Bitcoin Could Lose Grip On Dominance If It Fails To Adapt To Changes In The Market
This year, Bitcoin’s market dominance has been fluctuating between 49% and 57%, a lot of which has to do with its quadrennial cycle, which is closely linked to the mining reward halving event. Historically, these cycles have been pretty predictable, with a bear market approaching first, followed by a recovery phase, then a significant price surge right after the halving, and finally, an entire year of massive gains.
If this trend continues, we could expect to see Bitcoin’s dominance continue to rise into 2025, with some analysts even suggesting a price of $200,000 per BTC. However, there are plenty of reasons why the leading digital currency could lose its grip on the market, like if regulators decide to crack down hard on Bitcoin, altcoins start to gain serious traction, or if Bitcoin fails to keep up with changing times – whether that’s through innovation or adapting to market changes.
At the time of writing, Bitcoin (BTC) is trading at $58,480 – down 1.79% in the last 24 hours.
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