Transcription
Hey everyone, and thanks for jumping back into the cryptoverse. Today, we're going to talk about Bitcoin dominance. If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and also check out the sale on Into the Cryptoverse Premium at into the cryptoverse.com. Let's go ahead and jump in.
So, I'm actually recording this video on November 10th. I'll be out of town for a few days. I'm going to be speaking at Bitcoin Amsterdam. So, my apologies if, uh, things are a lot different than when I made this video, but right now, Bitcoin dominance is right below 60%. Okay.
Now, I'm still of the opinion that dominance is going higher, um, in the short term, right? And a lot of people have asked, like, well, why is it crashing and whatnot? But guys, when you, when you zoom out, it, it's been moving up for like eight weeks in a row, right? It's not moving up as, as quickly as perhaps I would want, but it's a lot easier to know what way the wind is blowing than to know exactly how, how fast that wind's actually going to blow. And again, I think dominance will likely continue to trend higher.
Now, one reason for that is that quantitative tightening, while it will end, it hasn't ended yet. And at least last cycle, we know that Bitcoin dominance actually topped, uh, in the post-halving year. Um, let me actually go back. It actually topped in the post-halving year. And while it was not the macro top for Bitcoin dominance for the cycle, it was a top for a while. Remember, the actual top for Bitcoin dominance last cycle occurred during quantitative easing. Okay? So that's an important thing to remember as well. But I, I could see a scenario where Bitcoin dominance goes up a lot and then it ends up topping right around when quantitative tightening ends in early December.
One of the reasons why early December makes a lot of sense is because a lot of the larger coins tend to bottom out against Bitcoin in early December. For instance, if you were to look at the ETH/Bitcoin pair, and we look at all the prior Decembers, you know, this is December of 2016. Um, December of 2017, right? Early December 2017, uh, December 2018, right? That's early December 2018, and so on and so forth, right? You could even go look at December 2015. Um, here's December 2019, right? Like the list goes on and on. December 2020. There are some exceptions. For instance, December 2021 was a high for ETH/Bitcoin, but I tend to think that ETH will continue to drop against Bitcoin into early December, just like it normally does. And so, because of that, it's going to likely allow Total 2 minus USDT divided by Bitcoin to drop into early December, and in some scenarios, drop back down to the lows that it was at back in June. So thinking like it coming back down, like, like this into December and then bouncing off of that seems like a very likely outcome. And if that's what happens, then to me, it would suggest that Bitcoin dominance should continue, um, to go up, right? Like that's what would make the most amount of sense.
Um, furthermore, we know that the dollar continues to go up, right? Like that continues to, to increase. And so with the dollar going up, that tends to usually mean that alts drop against Bitcoin over a longer period of time. But you can see the dollar has been slowly trending back up. And, and this was kind of what we talked about before was that it would likely form a low, like it did back in 2017, 2018, and then begrudgingly start going higher. And it seems like that's exactly what's happening. So it's another reason why all Bitcoin pairs should continue to bleed.
Now, we also mentioned that while they will likely bleed, there's going to likely be a, a brief, um, relief by all Bitcoin pairs in early to mid-November. Uh, you can see last week was green. This week is currently green. Very similar things happened, uh, in, in prior cycles as well. For instance, you can look at 2020. There was a two-week November green period right there. Also in 2017, there were a couple of weeks where all Bitcoin pairs kind of went back up a little bit. So, you're, you're getting that, that relief, but ultimately, you're, it'll probably drop back down, uh, by early December would be my guess. And, and that should allow Bitcoin dominance to go higher.
Now, I do think that while alt/Bitcoin pairs could continue to drop, I think that ETH/Bitcoin will put in a higher low. And so, that's why it's hard to know exactly how high Bitcoin dominance will go. Um, because I do envision ETH putting in a higher low against Bitcoin, even if all Bitcoin pairs put in a lower low. And I know that sounded crazy back when I mentioned it back in June, but, or back in April, but you can see that ETH put in a low and then a higher low and then a higher, potentially a higher low. While ETH has been putting in higher lows on its Bitcoin pair, alt/Bitcoin pairs have been putting in lower lows, right? So you have, um, this is April, and then June, and then again in October, right? So alts continue to drop against Bitcoin, despite the fact that ETH/Bitcoin was putting in higher lows during that time. So, I think that liquidity will run back over to Bitcoin. Obviously, if Bitcoin's dropping, that's not as much fun. But remember guys, in 2019, which again, there's a lot of similarities between, especially through the lens of quantitative tightening and, and interest rates. Bitcoin was able to just kind of stay above 10K for a while. And you could argue it's doing the same thing today, staying above 100K. And during that time, Bitcoin continued to take liquidity from the altcoin market. And that's what I think is happening right now. So, I think Bitcoin is a better hold than altcoins right now because if the bull market continues, Bitcoin should lead it. And every other time that we've seen Bitcoin go to a new all-time high, you can see that every single time, as it, as it sort of finds a low and goes to new all-time highs, Bitcoin dominance surges up until Bitcoin breaks that high. You can see here's another example, right, where Bitcoin dominance surged as Bitcoin went to a new all-time high. And, and you could argue that we just keep repeating that cycle. So, if Bitcoin were to go to a new all-time high, Bitcoin dominance should surge in route to that all-time high. And if we don't go to an all-time high, and we've already put in our high, Bitcoin will still likely try to stay around 100K for a while longer. And, and during that process, you would see altcoins become more devalued against Bitcoin, and then there, the sort of the writing would be on the wall. Remember back in 2019 when Bitcoin got a larger drop, it was after QT had ended, and it was after all Bitcoin pairs were hanging out at around 0.25, right? So if you look at like Total 3 minus USDT divided by Bitcoin, it was after all Bitcoin pairs had sort of fallen. And so you could argue that this is the initial drop by all Bitcoin pairs. Is now we're in this like little relief right here. But ultimately, I think they're going to come back down. Um, so watch for that, and if that happens, then we should see Bitcoin dominance go a lot higher, right? Even though right now, I know it's back below 60%, but we should see it go higher. You can see it, it's trying to break through the, you know, the bull market support band, and I guess Bitcoin dominance closed last week at 59.9%. So it's getting closer and closer. A lot of people think it's going to get rejected here, but I tend to be in the other camp, right? I think it's actually going to break through, um, would be my, my base case. So, I do think Bitcoin dominance is going to go higher, um, in, in the coming weeks, even if it is taking a, a brief break. But you could even argue it hasn't even really taken a break. It just, it might feel like one, but again, it's been moving up almost every, basically every single week since it found that low in September. And if you guys remember, we suggested that dominance would likely find a low in September because that's normally when it finds a low. It finds a low in September and then it surges up into, a lot of times it'll surge into, uh, December. Even in 2017, um, you know, dominance had that surge right there into December. In 2019, a surge in December, or sorry, in September, but that was going into the end of quantitative tightening. And then in 2020, a surge into December. So there just seems to be like so many different prior scenarios where dominance surges into December. And so that's going to be my base case, right? Liquidity should flow to the king. Hopefully, that's why Bitcoin's moving up. But if it's not, and Bitcoin's just trying to trade, trade sideways, Bitcoin is still a much better play than the altcoin market in my opinion.
If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and check out the sale on Into the Cryptoverse Premium at into the cryptoverse.com. I'll see you guys next time. Bye.