Keep an Eye on the BTC Dominance Chart

If there's one thing I know about crypto, it's to expect the unexpected. Things move pretty fast.

Now, let's talk about the market, because everyone loves to make money. Crypto will inevitably have another bull market and perhaps its already began. But is the money to be made in Bitcoin (BTC), Ethereum (ETH), or Bitcoin Cash (BCH)?

The two front runners by market cap (BTC and ETH) are obviously going to have the most prominence for investors. Until now, both could be considered good investments and are complimentary.

After BTC had managed to sustain high prices for years, despite having a limited transaction capacity (of around 400,000 transaction per day), I thought "Well, perhaps BTC doesn't need to scale to be what it envisions as digital gold. As long as it has the network effect of investor dollars, then it can be a high value transfer network."

But I'm starting to question that this kind of sentiment can sustain itself. There is the very real possibility that BTC's dominance could be seriously eroded in the years to come. Let's look at this chart for a second:

This is the BTC dominance chart. In May, it was nearly 70%, and now is 59%.

This chart is looking quite bearish. In fact, it's basically a textbook example of a bear channel in terms of technical analysis. Here, I'll draw it:

Is it possible for sentiment to change on if its dominance goes below 50%? What if it is someday no longer number 1? A massive BTC selloff is not out of the cards.

But even without extreme scenarios happening, I could generally expect that the risk reward proposition for BTC is continuing to weaken, certainly against Ethereum, and also Bitcoin Cash.