THE BITCOIN DOMINANCE CYCLE

The Bitcoin dominance cycle refers to the relationship between Bitcoin (BTC) and other cryptocurrencies "altcoins." Bitcoin dominance is a metric that measures Bitcoin's market capitalization as a percentage of the total cryptocurrency market capitalization. When Bitcoin dominance increases or decreases, it has various effects on both Bitcoin and altcoins, and these effects can be influenced by whether Bitcoin's price is increasing or decreasing at the same time.

Let's break down the Bitcoin dominance cycle and its effects:

High Bitcoin Dominance (Bitcoin Bull Market):

• Bitcoin's Price Increase: During a Bitcoin bull market, when Bitcoin's price is rising, Bitcoin dominance tends to increase. This means that Bitcoin's market capitalization is growing compared to the total cryptocurrency market.
• Effects on Altcoins: High Bitcoin dominance often leads to a decline in the relative value of altcoins. This is because investors tend to flock to Bitcoin as a store of value and a safe haven asset during bullish periods, causing altcoin prices to stagnate or drop in terms of both Bitcoin and fiat currency (e.g., USD).

High Bitcoin Dominance (Bitcoin Bear Market):

• Bitcoin's Price Decrease: In a Bitcoin bear market, when Bitcoin's price is falling, Bitcoin dominance may continue to increase or stabilize. This is because Bitcoin's market capitalization may not decline as rapidly as that of altcoins.
• Effects on Altcoins: Altcoins often suffer even more during bear markets, as investors may exit altcoin positions and move into Bitcoin or other stable assets. Altcoins may experience significant price declines both in terms of Bitcoin and fiat currency.

Low Bitcoin Dominance (Altcoin Season):

• Bitcoin's Price Increase or Stability: In some cases, Bitcoin's price may continue to rise or remain stable while its dominance decreases. This happens when altcoins experience significant price surges.
• Effects on Altcoins: During an "altcoin season," when Bitcoin dominance is low, investors become more interested in speculative altcoin investments. As a result, many altcoins experience substantial price increases in both Bitcoin and fiat currency terms. Some altcoins may outperform Bitcoin during this period.

Low Bitcoin Dominance (Altcoin Bear Market):

• Bitcoin's Price Decrease: If Bitcoin's price is decreasing while its dominance is low, it may indicate that both Bitcoin and altcoins are in a bear market.
• Effects on Altcoins: Altcoins may still experience price declines during an altcoin bear market, but the extent of these declines could be less severe compared to a bear market where Bitcoin's dominance is high.

In summary, Bitcoin dominance is a key metric that reflects the relative strength of Bitcoin in the cryptocurrency market. When Bitcoin dominance increases during a bull market, it tends to have a negative impact on altcoins. Conversely, during periods of low Bitcoin dominance, altcoins may have the opportunity to shine, especially during an altcoin season. However, the overall cryptocurrency market is complex, and other factors such as news events, technology developments, and market sentiment also play significant roles in determining the performance of both Bitcoin and altcoins.