BTC Dominance Hints What Bitcoin Price Could Do Next

Bitcoin (BTC) hit a new all-time high (ATH) on Monday as it shot up 3.79% in anticipation of Donald Trump’s inauguration speech. Since then, BTC has dropped 4.54% and currently trades around $104,965. With the short-term outlook uncertain due to the recent choppy movement, let’s look at BTC dominance and what that means for the long-term outlook of Bitcoin price.

Bitcoin Price Today

Bitcoin price today trades at $103,817.0 after dropping -1.91% in the past 24 hours. Despite this short-term pullback, BTC is up 3.54% this week and is still above the $100K psychological support level. 

But the dominance of BTC is at a key level and hints that the next phase of the bull run will be lead to exponential rallies.

*bitcoin price updated as of 11 PM

What is BTC Dominance?

Bitcoin dominance is the ratio of BTC and total crypto market capitalizations. Currently, this metric stands at around 60%. Generally, a spike in dominance is attributed to capital flowing into BTC, which often happens at the start of the bull. During this phase, Bitcoin price explodes quite a bit while a majority of the crypto market sectors remain without growth. At a certain point during the cycle, BTC’s uptrend hits a ceiling, leading to profit-taking and capital rotation. This diversification from investors leads to capital flowing to more risky assets such as altcoins or meme coins. When this happens, BTC’s uptrend slows down or corrects while the rest of the crypto markets explode. This phase is termed “alt season,” where the rest of the crypto market undergoes massive expansion.

How Does Droppin Dominance Affect Bitcoin Price?

Since its inception, Bitcoin’s dominance has been dropping with each cycle, producing lower highs. The first major collapse in BTC’s market share happened in early 2017. During this ICO mania of 2017, many altcoins yielded multiple 100x returns. Despite this, Bitcoin’s price shot from nearly $2000 to $20,000.

The second drop in dominance occurred in late 2020 and early 2021, when the DeFi-based altcoins saw parabolic rallies. In the next year, Bitcoin prices exploded from $20,000 to $69,000.

During both these drops, Bitcoin exhibited similar price action fractals – a steady down-trending consolidation followed by a breakout and an up-trending consolidation. After these two signals were spotted, the value of BTC increased exponentially while dominance dropped.

History is repeating itself according to analyst TechDev. For most of 2024’s second half, Bitcoin’s price consolidated in a downtrending channel. A breakout from this range led to new highs. Following this, BTC’s price is ranging again but inside an up-trending channel, suggesting that an exponential rally is next.

With such an optimistic Bitcoin price prediction, let’s look at key levels to buy BTC ahead of its parabolic rally.

Key Levels to Watch if Parabolic Rally Kickstarts

The key support levels for Bitcoin include $100K, $96.6K, $95.3K and $93.2K. Investors can consider buying BTC if the price dips to this level.

As noted in previous articles, the next all-time high for Bitcoin could be $120,000, which is the 161.8% Fiboancci extension level of the recently formed range.

Beyond this, many banks in the US expect Bitcoin to form a top anywhere between $150K to $200K in 2025. For example, Standard Chartered is looking at a peak of $250,000 in 2025. CMT Analyst Adrian Zduńczyk is a firm believer that the next ATH for BTC could happen at $225,000.

The $150K to $200K range is a good place to book profits if Bitcoin price enters this range.