Bitcoin VS Altcoins, and the continuous rise of Bitcoin's dominance (the big pie sucking blood) has been the core contradiction in the crypto world in recent years.
In fact, for secondary traders,
understanding the contradiction and capital flow patterns between Bitcoin and altcoins can help you avoid getting caught in the vortex of macro and crypto noise.
First, Bitcoin is seen as digital gold, a representative of value storage.
Altcoins are often viewed as speculative objects born alongside narratives.
The contradiction between the two:
BTC's "value storage" vs Alt's "disruptive applications/high growth potential".
The limited total market capital is allocated between BTC and numerous altcoins.
In a bull market, funds chase high returns flowing into Alts; in a bear market or sideways market, funds seek stability flowing back to BTC or stablecoins.
The entire crypto cycle operates under two capital flow patterns:
Capital Flow Pattern 1: BTC → Alts usually occurs at the start or mid-point of a bull market when market sentiment is optimistic. Investors allocate some BTC profits or new funds into altcoins, seeking higher beta returns.
Capital Flow Pattern 2: Alts → BTC/Stablecoins When the market turns bearish, risk events occur, or altcoin bubbles become too inflated, funds will withdraw from the altcoin market. Some flows back to the relatively stable BTC, while others are exchanged for stablecoins (like USDT, USDC) for hedging and waiting.
Together, this constitutes a complete cycle of bull market capital: Fiat → BTC/ETH/stablecoins (inflow channel) → Hot Alts (chasing hot spots) → Profit-taking/hedging → BTC/stablecoins → Fiat (outflow) or waiting for the next opportunity.
Therefore, judging the trend of the altcoin market is much easier than judging the trend of Bitcoin. A breakthrough in BTC often boosts the confidence of the entire altcoin market. You can completely formulate altcoin speculation strategies after confirming the trend of Bitcoin, and after reasonable profits, exchange altcoins for USDT or Bitcoin.
