The Bitcoin dominance (BTC.D) surged above 64% this week, its highest stage since March 2021, sparking debate over an impending quick squeeze that would ship its value skyward. The stark warning comes from Joe Consorti, Head of Growth at Theya, who took to X on Monday to stipulate what he views as a decisive turning level for Bitcoin versus the remainder of the digital asset market.
A Historic Break In Bitcoin’s Correlation Patterns
In his post, Consorti contends that Bitcoin’s latest value motion marks the primary time in its 16-year historical past that each its value and market dominance have risen in tandem. Historically, Bitcoin’s dominance would rise initially, solely to wane as hypothesis spilled into altcoins. However, Consorti states: “This is the first time in history that bitcoin’s share of the total digital asset market is rising while its price is climbing. In past cycles, retail-driven speculation pushed bitcoin’s price up and later funneled money into altcoins, causing bitcoin dominance to decline. That dynamic is gone.”
According to Consorti, the times when a broad altcoin rally would comply with Bitcoin’s preliminary surge look like over. Bitcoin dominance not too long ago touched 64%—its highest stage since February 2021. Consorti attributes the phenomenon to a big change in market participation: “This cycle, institutions, sovereigns, and long-term holders are leading the charge, increasingly allocating capital exclusively to bitcoin while largely ignoring the rest of the market.”
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Last week’s market turbulence resulted in what Consorti calls “the single-largest liquidation event in ‘crypto’ history,” citing information that greater than $2.16 billion in positions have been worn out inside 24 hours. Ethereum led the liquidation figures with $573 million, and the most important single liquidation—a $25.6 million ETH/BTC order—occurred on Binance. “As you might have guessed, ETH/BTC is not having a great time,” Consorti notes, stating that the ETH/BTC pair is buying and selling at 0.026—its lowest stage in over three years.
He argues these liquidations spotlight the precarious nature of closely leveraged altcoin markets: “All of it wiped out in an instant when price moved against them. This wasn’t your standard technical correction, it marks the start of an extinction-level event for altcoins.”
The “Altcoin Casino” In Crisis
Consorti’s evaluation means that what he dubs “the altcoin casino” is now collapsing. He factors to failed narratives round common initiatives—Ethereum, Solana, and DeFi amongst them—which have struggled to keep up investor confidence: “Altcoins have survived purely on narratives. Each cycle, a new batch of narratives emerged, promising world-changing innovation. None of them lasted.”
He contrasts this with Bitcoin’s core worth proposition, which, in his view, requires no advertising: “Bitcoin, on the other hand, doesn’t need a narrative. It doesn’t need marketing or hype. It exists, and it thrives because it was built to do one thing—protect wealth in a world of perpetual monetary expansion.”
Consorti additionally references Ethereum’s “merge” and its supposed deflationary design, stating that because the improve, ETH’s complete provide has elevated by 13,516 ETH—undermining the “ultra-sound money” declare.
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Adding a coverage dimension to the market’s transformation, Consorti highlights a press release from Senator John Boozman through the White House Crypto Working Group’s first press convention: “Some digital assets are commodities, some are securities.”
This, he suggests, is a tacit acknowledgment that Bitcoin stands aside from different digital property. In an additional growth, Consorti cites a remark from White House AI & Crypto Czar David Sacks, who talked about the group is evaluating the viability of a Strategic Bitcoin Reserve—a shift from the earlier “National Digital Asset Stockpile” terminology used underneath a Trump-era govt order.
Consorti frames this as a “major development” that indicators rising recognition of Bitcoin’s distinctive properties: “This language shift is monumental. A few years ago, the US government was openly hostile toward bitcoin. Today, they’re discussing stockpiling it.”
Amid this upheaval, Consorti means that the subsequent dramatic transfer in Bitcoin could possibly be an explosive quick squeeze. Funding charges on perpetual futures, he notes, have gone “deeply negative,” paying homage to when Bitcoin traded close to $23,000 in August 2023. This implies a tilt in leverage towards merchants betting in opposition to Bitcoin—a place that would quickly unwind: “While last week’s leverage flush wiped out most long positions, the next major move could be the opposite—an explosive rally fueled by forced short liquidations.”
Should the market flip in opposition to these short-sellers, the compelled buy-backs might drive the value increased with uncommon pace and quantity—particularly if general liquidity stays skinny. He concluded, “Traders who overextended their leverage to short bitcoin will eventually have to buy it back when the price moves against them, just like overleveraged longs were wiped out last week. Bitcoin is coiled. The stage is being set for a potential short squeeze. The longer this dynamic of short dominance persists, the greater the risk of a forced shirt liquidation cascade that sends bitcoin’s price higher with force.”
At press time, BTC.D stood at 61.19%.
Featured picture created with DALL.E, chart from TradingView.com
