Bitcoin dominance (BTC.D) is a key market sentiment oscillator that moves cyclically, signaling potential trend shifts. Within this cycle, two major global phases can be identified:
1. The Altcoin Maximalist Phase
This phase is characterized by low BTC dominance, where its percentage declines. It is the shortest period in the cycle, during which a strong altcoin rally attracts a wave of inexperienced investors. These newcomers form a fundamentally incorrect view of the market:
“This is where easy money is made—just buy altcoins and get rich. Bitcoin is for whales; if you want big gains, keep averaging down on alts.”
However, as soon as BTC dominance exits this low range and begins to rise, these investors face reality. Their capital, invested in digital “paper tokens”, starts depreciating. Through personal experience, they begin to understand the market’s harsh statistics, and as BTC.D increases, many of them transition into Bitcoin maximalists.
2. The Bitcoin Maximalist Phase
This phase sees a prolonged increase in BTC dominance, reaching its peak levels in the cycle. It is the most painful period for altcoins, as the market becomes unappealing to those seeking quick money.
At this point, the broader crowd finally realizes the importance of liquidity and risk management. Even the most devoted altcoin enthusiasts, armed with a calculator, begin to see the stark difference between speculative tokens and Bitcoin.
The Structure of the Cycle
In a four-year market cycle, Bitcoin dominance spends most of the time increasing, moving toward the Bitcoin Maximalist phase. The period of sharp BTC.D decline, transitioning into the Altcoin Maximalist phase, is comparatively short. Once this phase ends, the cycle resets.
A clear example is June 2022, when BTC dominance stood at 40-45%. At that time, while most retail investors were aggressively accumulating altcoins, we positioned ourselves for Bitcoin, anticipating BTC.D to rise toward 60%, entering the “Bitcoin maximalist” phase.
Today, this scenario seems obvious in hindsight. However, three years ago, any mention of BTC.D rising and altcoin risks was met with strong denial from retail participants. The same pattern is unfolding now—just in the opposite direction.
What’s Next?
Market cycles remain unchanged. The next BTC dominance reversal will likely be just as sharp as in previous cycles. Historically, it takes only 3 to 6 months for market sentiment to fully flip—from Bitcoin maximalists back to altcoin believers.