Bitcoin has been the dominating force in the cryptocurrency market ever since its launch. Although there were many instances when the leading crypto was outperformed by altcoins, none of them ever came close to challenging Bitcoin’s hegemony, and the chances of that happening in the future are rather slim.
Shortly after the US presidential elections, Bitcoin’s price jumped to a new all-time high slightly beneath the 100K threshold, and the Bitcoin Dominance Index – the metric representing the asset’s share of the total crypto market – reached 61.39%, the highest level in over 3 years. However, by December 2nd, Bitcoin’s dominance fell back to 56.75%, indicating that altcoins might be ready to steal the spotlight.
According to the latest Solana crypto price prediction, SOL could be one of several altcoins en route to outpacing the crypto king, alongside Dogecoin (DOGE) and Render (RENDER). All of these three assets recorded significant gains during the crypto rally that overshadowed the primary coin’s performance in the last months of 2024.
So, looking at the situation from the lens of altcoins, is Bitcoin’s enduring dominance a good or a bad thing? Does this benefit the altcoin crew, or is it detrimental to their development? These are some of the questions that investors are trying to answer as they assess their options.
Bitcoin’s rightful power and position
Despite encompassing a wider variety of digital currencies than ever before, the crypto market is often regarded as a one-coin show, with Bitcoin getting all the attention and the rest of the assets acting as its satellites. It’s true that the balance has always tilted in Bitcoin’s favor in terms of popularity, sometimes distracting from projects that might have been just as or even more deserving of notice and recognition.
However, one should not forget that Bitcoin’s dominance stems mainly from its first-mover advantage. Bitcoin may not be the first attempt at creating a digital form of money, but it was the first digital currency to make it into the public eye and be used by millions of people from all over the world. As the oldest crypto in existence, it’s natural that traders and investors trust it more and see it as the safest option. Bitcoin has stronger fundamentals than most altcoins and a longer track record than all of them, and that enhances its legitimacy and reputation as an established asset.
Therefore, it’s perfectly normal that Bitcoin benefits from a disproportionate advantage, and every time a new bull run comes around, it’s the first coin to reap the rewards. That’s exactly what happened this past November when Bitcoin soared to record highs after the US election outcome sparked enthusiasm among the crypto community due to expectations that the Trump administration would be crypto-friendly.
But just because Bitcoin has been the biggest winner in the most recent crypto rally doesn’t mean it was the only digital currency that stood to gain from it. The altcoins also had their fair share of growth, and that may be just the beginning of the appreciation trend for them.
The trickle-down effect
For those who worry that Bitcoin attracting so much capital and commanding such a big share of the market could negatively impact altcoin’s evolution, the trickle-down effect could offer an interesting perspective to consider. This theory states that Bitcoin’s surge benefits all the other digital currencies because the money that flows into the main coin will eventually find its way towards the rest of the assets in the market.
In a bull run, the initial price spike draws investors to Bitcoin, but as the asset becomes more expensive, they turn their gaze toward other digital currencies with lower barriers to entry, and that’s when the altcoins start gaining ground, often surpassing Bitcoin’s performance. This has happened numerous times in the past and might also be the case right now
The recent decline in Bitcoin’s dominance seems to support this scenario, suggesting that the slowdown in Bitcoin’s rally could give way to a new altcoin season. The first signs of that happening are already apparent if we look at Solana’s evolution. SOL, one of the strongest altcoins in the market, often referred to as Ethereum’s main contender, mirroring many of its innovative features and utilities but having greater speed and efficiency as differentiators, has been on a winning streak, reaching a new all-time high of $263 on November 22.
The rising trend that SOL experienced over the past months puts it on par with Bitcoin in terms of gains for the same period. If Bitcoin pushes above the 100K mark, SOL has a great chance of an even bigger breakout. At the time of writing, the asset was trading at $226, with a market cap of $107.73B.
This proves that Bitcoin’s growth can pave the way for altcoins to grow as well. It’s impossible to predict which tokens will profit the most from the trickle-down effect and how much they will gain from it, but if historical patterns are anything to go by, we can expect some significant rallies in the altcoin arena.
Bottom line
Investors often grow frustrated with Bitcoin’s dominance, thinking that it’s unfair for just one crypto to receive so much attention and hold such a large share of the market while other assets bounce back and forth in tight price ranges. It can certainly be disheartening to see Bitcoin going on a winning streak, leaving the altcoins in the dust, especially if you have most of your funds tied up in smaller-cap coins that don’t have the same appreciation potential.
However, it’s important to focus on the bigger picture and analyze things in context when looking at the Bitcoin-altcoins dynamic. Doing so will make you realize that Bitcoin being in the lead is not necessarily a bad thing for altcoins and might actually help many of them take off. As usual, patience and attention remain key in crypto investing as prerequisites for making informed decisions.
