Why Is Bitcoin Dominance Heading Toward 60%?

TL;DR

Bitcoin dominance is entering its final stretch and will likely peak near 60% before turning down in 2025. The main driver is a weakening altcoin market and ETH/BTC bottoming in the 0.03 to 0.04 range. Trading Bitcoin over altcoins until dominance hits 60% preserves the Satoshi value of a portfolio.

Transcript

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Key Insights

• Bitcoin dominance is around 58% and is entering its final stretch, expected to top out near 60% before very likely declining in 2025, according to the analysis presented.
• Sticking with Bitcoin over the collective altcoin market until dominance reaches 60% helps preserve the Satoshi value of a portfolio, a view stated at the start of the bear market in early 2022.
• ETH/BTC is trading around 0.039 and has entered a bottoming process, with a likely bottom somewhere between 0.03 and 0.04, a target range called for years before price arrived there.
• Daily closes above the 50-day SMA are the signal that the ETH/BTC bottom is in, based on how the 2016 and 2019 cycles confirmed their lows after reclaiming that moving average.
• If 0.038 does not hold on ETH/BTC, the next support is 0.036, a level that corresponds roughly to the 2016 all-time high of ETH/BTC when drawn across the chart.
• Bitcoin dominance is tradable by converting altcoins and ETH into Bitcoin before the uptrend, not by buying dominance directly, since higher-cap altcoins and ETH must fall against Bitcoin to move dominance from 40% to 60%.
• One Bitcoin now buys about 25 ETH, up from 11 ETH at the merge and 22 ETH previously, illustrating why the BTC/ETH pair matters for dominance direction.
• Alt/Bitcoin pairs like total3 minus USDT divided by Bitcoin are oscillators at best and are most likely to break back down to the range low near 0.25 before returning to parity with Bitcoin.

Questions & Answers

Q: How high will Bitcoin dominance go before topping out?

Bitcoin dominance is currently around 58% and is described as entering its final stretch. The base case is that it goes just a bit higher, probably topping out at around 60%, before very likely turning down in 2025. Many people once dismissed the idea that dominance could return to these levels as insignificant or delusional, yet it has climbed there. The move higher is driven mainly by the altcoin market weakening rather than by ETH/BTC alone.

Q: Why should you hold Bitcoin over altcoins during a dominance uptrend?

At the beginning of 2022, the view stated was that the bear market was starting and that buying Bitcoin over the collective altcoin market was the better choice. The core reasoning is that sticking with Bitcoin until dominance reaches 60% helps preserve the Satoshi value of a portfolio. While some altcoins always outperform Bitcoin in a dominance uptrend, most holders would have been better off staying in Bitcoin, and critics had to cherry-pick specific points to argue dominance does not matter.

Q: What is the ETH/BTC target range and where is it now?

ETH/BTC is trading around 0.039 and is described as having entered a bottoming process. For years the call was that ETH/BTC would return to the 0.03 to 0.04 range, and it is now within that range. The likely bottom sits between 0.03 and 0.04, and it is possible it has already bottomed. If 0.038 does not hold, the next support is 0.036, with an absolute worst-case scenario of 0.03, though that low is not considered the base case for this year.

Q: How do you confirm that ETH/BTC has bottomed?

The signal to watch is daily closes above the 50-day SMA. Until ETH/BTC gets some daily closes above that moving average, it makes sense to stay open-minded that price could go a little lower. This is based on prior cycles: in 2019, reclaiming the 50-day estimate meant the bottom was in, and in 2016 the bottom came after ETH/BTC durably broke the range low and then reclaimed the 50-day moving average. In early September, ETH/BTC was rejected off the 50-day SMA and is trying to hold its lows again.

Q: Can you actually trade Bitcoin dominance?

Yes, dominance is tradable, contrary to critics who claim it is not. You do not buy dominance directly; instead you convert altcoins and ETH into Bitcoin before the uptrend happens. Since dominance moving from 40% to 60% requires higher market-cap altcoins and ETH to fall against Bitcoin, understanding the main view lets you position for it. Around the time of the merge, the described action was converting ETH to Bitcoin. At this point, however, it is considered far too late to get on that trade.

Q: What does the BTC/ETH ratio show about the trend?

Taking the inverse of ETH/BTC gives BTC/ETH, which shows how many ETH one Bitcoin buys. At the merge, one Bitcoin got you about 11 ETH; by a prior video it was 22 ETH; and now one Bitcoin gets you about 25 ETH. This progression demonstrates why the pair matters and why the claim that dominance cannot be traded is wrong. The rising number of ETH per Bitcoin reflects Bitcoin strengthening against ETH, which supports the dominance uptrend.

Q: What is the outlook for alt/Bitcoin pairs?

Alt/Bitcoin pairs, measured as total3 minus USDT divided by Bitcoin, are viewed as oscillators at best. If they are oscillators, the expectation is they eventually return to the range low. They were at the range low in December of the last halving year, so they could return to the range low potentially by December of this halving year. The most likely scenario is an eventual breakdown to the lows near 0.25 before any pump back up to parity with Bitcoin, though a rally in between remains possible.

Q: Does the exact bottom price of ETH/BTC really matter?

The argument is that the precise bottom does not matter much, similar to Bitcoin USD in 2022. Bitcoin bottomed at 15.4K, and even after calling for a further Q4 drop, the point made was that buying Bitcoin at 17K means you likely will not care years later whether you got it at 17K, 15K, 14K, or 13K. The same logic applies to ETH/BTC now: after calling the 0.03 to 0.04 target for three years and watching it arrive, it no longer makes sense to remain overly bearish, even if a slightly lower move is possible.

Summary & Key Takeaways

• Bitcoin dominance, long dismissed as insignificant, sits near 58% and is entering its final stretch. The expectation is a top around 60%, followed by a likely decline in 2025. This continues a thesis held since early 2022 favoring Bitcoin over altcoins.

• ETH/BTC trades near 0.039 and appears to be bottoming between 0.03 and 0.04, a range called for years. Confirmation requires daily closes above the 50-day SMA; until then, a move slightly lower toward 0.036 or worst-case 0.03 remains possible.

• Dominance is tradable by swapping altcoins and ETH into Bitcoin ahead of the uptrend. One Bitcoin now buys 25 ETH. Alt/Bitcoin pairs are viewed as oscillators likely to fall back to the 0.25 range low before any return to parity with Bitcoin.