Bitcoin, as we all know, was the first cryptocurrency and is still by far the largest and most common. Meanwhile, even during the next Bull Run, the possibility of any altcoin's market cap exceeding Bitcoin's is extremely unlikely.
This is due to the fact that Bitcoin is where the majority of institutional and seasoned retail investors are placing their capital. Any time soon, you won't see big businesses buying altcoin dips. Except for Bitcoin, Ethereum is starting to gain traction among serious investors. This seems to be partly due to the imminent release of Ethereum 2.0, which has several major investors, such as Greyscale, calling ETH 2.0 a material risk to investment.
Bitcoin is less volatile than altcoins, and its volatility has been slowly declining over time, as more and more holding is on the air. Furthermore, the price of Bitcoin has a huge impact on altcoins. When Bitcoin grows, so do altcoins. Many altcoins, particularly those with a smaller market cap, suffer short-term losses when Bitcoin rises too quickly.
What is the reason for this? Since the vast majority of capital invested in low-cap altcoins comes from crypto rocketeers seeking the fastest route to the moon. All of us leave our altcoins and run to the Bitcoin spacecraft when we see Bitcoin take flight. Is that correct?
And when Bitcoin's popularity fades and its price plummets, everything comes crashing down. This is one of the cases where red becomes your worst color.
Nonetheless, it is speculated that, when Bitcoin is steadily rising in price or trading sideways, altcoins seem to make the most profits.
This is partially due to opportunistic investors being disappointed with the slow-paced price behavior of Bitcoin and other large altcoins and heading closer to the deeper and more chaotic waters above the top 50 altcoins. As a result, Bitcoin dominance seems to have been declining steadily, having reached around 57.4%.
During the previous crypto bull run in 2017 and 2018 Bitcoin dominance fell to just 37%. This is important because a large amount of money moving into altcoins is part of why many alts saw their all-time highs during that period. Assuming this downward trend in Bitcoin dominance continues, we may just see another sudden drop in Bitcoin dominance. If this happens, it will once again bring a flood of money into the altcoin space and take many alts to new all-time highs.
These Bitcoin-altcoin dynamics are extremely important to comprehend because your altcoin exit strategy must be mindful that it will be heavily affected by Bitcoin's behavior. Bitcoin's market cap essentially sets the upper limit on where your altcoin can go. While it's true that Bitcoin's market cap will definitely continue to increase as the bull market continues, selling your Dogecoin when it crosses $50 isn't a viable exit strategy because it would give Dogecoin a market cap of over $7 trillion dollars, oups, inflationary supply detected.
