Bitcoin Dominance

Summary

• Bitcoin dominance (BTC.D) is about 60% in the video. The presenter expects it to hold or rise in the near term, but does not expect it to climb throughout the entire cycle, unlike his view of the prior cycle.
• The presenter’s macro framework compares the Federal Reserve policy rate with the 2-year Treasury yield as an indicator of monetary-policy tightness:
  • When the Fed rate is above the 2-year yield, he considers policy restrictive.
  • He says BTC dominance began rising after bottoming around the period when policy became restrictive, from late 2022 into early 2026.
  • At the time of the video, the Fed rate is below the 2-year yield, which he interprets as indicating less restrictive policy.
• Rates and yields: The video puts the 2-year yield at around 4.8% and says Fed expectations imply the policy rate might return to 4.75% by April. As a hypothetical, a Fed rate of 4.25% alongside a 2-year yield falling to 4.5% would bring policy closer to restrictive territory. The presenter suggests yields could decline after the midterm elections, potentially making policy restrictive sooner than mid-2027.
• He sees 2018 as a possible historical analogue: 2-year yields rose during the year and could later fall after the midterm elections.
• U.S. dollar (DXY): The presenter remains bullish, citing higher lows in January, May, and August 2026 and a broadly rising trend during the year. He also compares the dollar’s path in the second Trump term with its behavior in the first: weakness in the first year, followed by a gradual rise in the intervening year.
• His cycle outlook is that tighter policy and a stronger dollar may initially support BTC dominance. If the economy later feels the effects of higher rates and substantial rate cuts follow—possibly a year or two later—he expects the dollar and BTC dominance to fall, while Bitcoin-denominated altcoin pairs recover.
• Dominance measures and altcoins:
  • BTC dominance excluding stablecoins has recently declined, while the measure that includes stablecoins has continued to rise.
  • The presenter argues that subdued altcoin gains and stablecoin market share are helping keep measured BTC dominance elevated.
  • If Bitcoin reaches new all-time highs, he expects some capital to rotate from altcoins into Bitcoin, supporting dominance.
  • Dominance has stabilized near its September 2020 level. A later decline below 50%, potentially into the upper 40% range, is possible in his view, but not expected in the short term. He expects dominance may first rise and test its 2025 highs.
• Chart comparisons: The presenter notes that BTC dominance previously peaked before the end of quantitative tightening (QT), then revisited that level during Bitcoin’s parabolic rally. He also reviews Total 3 minus USDT divided by Bitcoin, along with a version that includes USDC, as indicators of altcoin performance relative to BTC.

Framework and Outlook

• Compare the Fed policy rate with the 2-year Treasury yield to gauge policy tightness.
• Consider how rates, yields, and the dollar may affect Bitcoin dominance.
• Compare BTC dominance with and without stablecoins to distinguish Bitcoin’s relative strength from stablecoin-market effects.
• Track altcoin/BTC pairs. The presenter expects them to remain under pressure while policy is tight, then potentially rise when policy becomes more accommodative.
• Caution: This is the presenter’s market outlook, not a certainty. He specifically cautions against expecting BTC dominance to rise throughout the entire cycle.

Assets and Instruments Mentioned

• Bitcoin (BTC) and Bitcoin dominance
• Altcoins and altcoin/BTC pairs
• Stablecoins: USDT and USDC
• Total 3 (an altcoin market-cap measure)
• U.S. dollar index (DXY)
• Federal Reserve policy rate and 2-year U.S. Treasury yield
• Quantitative tightening (QT)

Disclosures and Sources

No explicit financial-advice disclaimer appears in the subtitles.

Presenter/source: Benjamin Cowen, Into the Cryptoverse.