Bitcoin dominance shrinks despite ETF!

Last Updated: 16. Januar 2024By

This is crazy! The ETF for Bitcoin gets the green light and everything falls. So, I had expected this to be a „sell the news“ event. After all, billions of dollars won’t flow into the market just because the ETF has been approved by the US regulatory authority.

Bitcoin has also performed very well in 2023. So, it is possible to use this news about the ETF to take profits. But what I have discovered here is truly surprising.

Bitcoin dominance in the daily chart has dropped by over 6 percent in the last few days! While Bitcoin has lost around 14 percent during the same period, its dominance has also decreased significantly. This means that investors have not only sold their Bitcoin – they have also bought other coins.


So, there has actually been a reallocation, as investors now expect smaller coins to perform better than Bitcoin. For example, Ethereum has risen by 24 percent during this time. Here, we are now back above $2,500. We haven’t seen such prices since May 2022!

In the chart above, you can see the ideal zone for Bitcoin dominance marked in color. Bitcoin’s share of the total crypto market should be over 57 percent. This would be in line with previous cycles. However, it is not so important for Bitcoin to necessarily reach this zone. What is more important is the blue line, which indicates the estimated time of the next halving.

From that point on, the rewards for mining a Bitcoin will be halved again. This is usually when the next bull market starts. Those who start buying 2 months before are usually well positioned. Of course, there can always be downward fluctuations.

It would be wonderful if the Bitcoin dominance was in the marked area at the time of the halving. It is normal for other coins to rise more than Bitcoin at times. There is always a certain variance. Ultimately, the dominance continues to climb higher.

How did it go with the last halving? On May 11, 2020, the Bitcoin dominance was around 68 percent. Six months before that, it reached its temporary high of 73 percent. If we use this as a model, we may have already seen the first high of this cycle. So far, it was in December at 55 percent.

Interestingly, 7 months after the halving in 2020, the dominance reached a higher high. This was exactly at the turn of the year. Afterwards, Bitcoin’s dominance fell below 40 percent. But this says nothing about the price of Bitcoin. Because it was only 7 months after the low in dominance that Bitcoin hit its new all-time high.

We still have buying opportunities for the next bull market. Remember: In Germany, crypto profits are tax-free after 1 year if you have held a coin for 365 days.

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