Altcoin Szn Incoming? The BTC Dominance Bear Case

Alongside rising crypto prices this cycle has come BTC outperformance!

While Bitcoin’s dominance, or its share of the total crypto industry market capitalization, has steadily increased to 60% since the November 2022 bankruptcy of FTX—up from 40% just two years ago—investors had altcoins on their minds as they initially pieced together the implications of Donald Trump’s election on November 6th.

That said, let's zoom in some more. Here’s why you can expect BTC dominance to fall under the Trump Administration... 👇

🐂 Bullish Basics

Although Donald Trump has provided limited clarity on the crypto-friendly policies he intends to adopt during his next term as President, we are aware of the bullish basics.

For starters, at his Bitcoin 2024 appearance, Trump bombastically pledged to fire SEC Chair Gary Gensler on day one, promised to make America the crypto capital of the world, and stated his intention to accumulate a national BTC stockpile.

Crypto may have been relegated to the sidelines during the previous Trump Administration, but the Donald has since embraced the technology, launching his own NFT trading card collection in December 2022.

More recently, Trump positioned himself in September as a founder of “World Liberty Financial,” an upcoming (and still undeployed) DeFi project alleged to be an Aave deposit frontend that is actively soliciting investment from accredited U.S. and non-sanctioned international investors in exchange for non-transferable WLFI tokens.

Setting aside concerns about the complete lack of policy specifics provided on how the Trump Administration can/will benefit crypto, America’s next POTUS has an undeniable financial incentive to craft or eliminate regulations to benefit the industry given his family’s significant stake in WLFI.

While crypto tokens and blockchain-enabled applications have long been encumbered by onerous financial regulations, many industry participants are optimistic for change over the next four years, anticipating that the Trump Administration will specifically carve out a variety of enforcement exemptions for crypto projects.

Further, considering that Republicans have secured the majority in Congress, a unified government may codify such non-enforcement policies in legislation, extending the duration of their benefits well beyond Trump’s time in office.

👑 Altcoin Supremacy

Assuming Trump stays true to his campaign promises, a major thawing in the hostile relationship between U.S. regulators and the crypto industry is inbound.

Such relief likely enables many different types of crypto tokens to receive ETF listings on national stock exchanges, and increased availability of digital assets could compel people to buy a wider variety of crypto tokens beyond simply BTC.

Even more alluring is the possibility that existing regulations prohibiting registered financial institutions (like banks) from interacting with permissionless blockchain technology could be revoked. Although many crypto tokens appear overvalued on a fundamental cash flow perspective, the industry’s value is predicated on its growth prospects, and with positive regulation, mass adoption may finally be realized.

As we inch ever closer towards Trump’s inauguration, anticipation that some nebulous future policy change will induce token demand or crypto utilization rationalizes every token into a world-class buy at any price.

If all nations, institutions, and individuals are to follow suit with the United States under a presumptive Trump Administration and adopt BTC reserves, it is only reasonable to assume that the coin can sky rocket to a mind-numbingly high market capitalization.

But why stop there?

Will investors not begin aping ETH, the second largest cryptocurrency and a deflationary alternative to BTC that powers the most expansive onchain economy in existence?

Can the proliferating retail masses be expected to not then migrate to L2s, like Base, and ape even longertail assets with loftier prospects for returns on perpetuals-fueled binges? Did I mention that Base also has a token in this scenario?

And when they’re one step away from the global casino tables, what degen speculators won’t toss a little cash at Elon Musk’s perennial favorite memecoin, DOGE?

With the Trump Administration’s blind eye to boot, crypto appears poised for a period of bliss reminiscent to the ICO Mania heydays 2017, when BTC dominance fell as unfettered optimism indiscriminately lifted everything and anything to irrational prices.