Benjamin Cowen explains why Bitcoin dominance is a critical metric for understanding the cryptocurrency market. He highlights how Bitcoin's dominance tends to rise during bearish or uncertain times, as investors prefer its relative safety over altcoins. Conversely, altcoins typically outperform Bitcoin in the year after a halving (like 2025), when risk appetite grows.
In 2024, Cowen accurately predicted Bitcoin dominance would reach 60%. He attributes this to altcoin corrections, a larger stablecoin market, and the Federal Reserve's quantitative tightening (QT), which kept money flowing into safer investments like Bitcoin.
For 2025, Cowen advises against assuming Bitcoin dominance will keep rising. While it may drop as altcoins gain attention, a significant decline would likely require the Fed to shift to quantitative easing (QE), which stimulates higher-risk investments. However, QE would only happen if there’s a major economic downturn or alarming data point, like rising unemployment.
Cowen also emphasizes the importance of Bitcoin as a foundational investment. It offers stability and performs well during uncertain times. While some altcoins might outperform in specific conditions, they carry higher risks. He suggests holding a majority of one’s crypto portfolio in Bitcoin and only diversifying into altcoins when conditions strongly favor them.
In summary, Cowen recommends closely watching Bitcoin dominance as a guide to market trends. Be flexible, monitor macroeconomic developments, and adjust strategies as needed. Bitcoin dominance remains a valuable tool for navigating the unpredictable world of crypto.
