Originally published on: August 18, 2024
In a recent interview on The David Lin Report, crypto analyst Benjamin Cowen expressed skepticism about Bitcoin dominance returning to the 70% mark it hit in December 2020. Cowen believes that Bitcoin’s dominance is more likely to stabilize around 60% in the current market landscape.
Factors Influencing Bitcoin Dominance
Cowen noted that during significant altcoin seasons, such as the one witnessed in 2021, Bitcoin’s dominance tends to decrease before gradually rebounding towards previous levels. However, this time around, Cowen is confident that Bitcoin’s dominance won’t reach the heights seen in the past due to the growing presence of other cryptocurrencies like Ethereum.
According to Cowen, Bitcoin is poised to make its way towards the 60% dominance mark either by September or December. Presently, Bitcoin’s dominance stands at 57.36%, showing a 4.25% increase since July 18.
Contrasting Views and Altseason Expectations
On the other hand, pseudonymous trader Kaleo shared a contrary view, suggesting that Bitcoin dominance may have already peaked during this cycle. Kaleo believes that a true altseason kicks off when Bitcoin’s dominance falls below the 50% threshold.
Significance of Bitcoin Dominance in Trading Strategies
Traders often monitor Bitcoin dominance as a key indicator to make strategic decisions such as selling Bitcoin and diversifying into alternative assets like altcoins. The historical data shows that Bitcoin dominance peaked at 70.23% in December 2020 before Bitcoin’s price surged around 220% to $61,283 in March 2021.
Combining Bitcoin Dominance with Stablecoin Dominance
To gauge the overall market sentiment, Cowen recommends considering the combined dominance of Bitcoin and the stablecoin Tether (USDT). By combining the two, investors can calculate their “flight to safety dominance,” which currently stands at 63.07%.
In summary, while the future path of Bitcoin dominance remains uncertain, analysts and traders continue to closely monitor its movements for valuable insights into the evolving crypto market landscape.
