Bitcoin dominance (BTC.D) has been on a multi-year tear. That is, until this November when older “dino” cryptocurrencies like XRP, Stellar Lumens, and Doge experienced outsized surges compared to the rest of the crypto market. By now we’ve come to expect the capital flows within crypto to go between Bitcoin and the rest of the crypto market, but each cycle looks a little different.
In an era where most bitcoin buyers wear suits instead of hoodies, bitcoin behaves more as a pristine treasury asset – Bitcoin dominance may not give the full picture.
Source: tradingview.com BTC.D
Despite bitcoin crossing $100,000, Bitcoin dominance pulled back from 61% to 54% over a 4 week period in November. While this happened during a secular “alt season” that we’ve come to expect, there was one crypto category that stood out: “Dino Coins”.
Dino coins is a broad term for cryptocurrencies that have been around for a while that typically don’t have strong narrative fit for the terminally online crypto investor of today. Take for example, XRP (“payments and transfers”) or Stellar Lumens (“fiat-crypto cross border payments”). These cryptocurrencies usually date back to 2016-2019 during the ICO craze and have been written off as forgotten by most institutional investors and the bleeding edge of crypto researchers. However, these cryptocurrencies have been around for so long that they are familiar in the minds of retail and are supported by almost every major exchange. As retail returns, so do old narratives.
These Dino coins dramatically outperformed other alts, with XRP, Doge and XLM up 300% each and Cardano, Hedera, VeChain up 150%-250%. This happened while the “savvy” crypto investors favorite tokens such as Ethereum and Solana only rose ~60% each.
These erstwhile extinct coins through some cold water on top of Bitcoin’s $100K moment, with BTC.D dropping 7%. For reference, Bitcoin dominance has been growing steadily over the last few years, since its all time low in September 2022 of 38%.
On-chain dominance may not tell the full story.
This cycle has been defined by the rise of Bitcoin on corporate balance sheets. Look no further than Microstrategy’s Bitcoin treasury gamble. Saylor & company have now gobbled up over 2% of the entire Bitcoin supply (423K bitcoin worth $42 billion) and $MSTR stock trades about 2.3x the value of Bitcoin on its balance sheet.
Saylor’s gamble appears to be paying off well. So, the playbook is being replicated, from corporate Bitcoin miners like Marathon (33k btc, $3.3 billion) and RIOT (10k btc, $1 billion) to international micro caps such as Japan’s Metaplanet (1k btc, $100 million). Metaplanet, for example, has an annual revenue of only $3 million. Meanwhile, its marketcap has climbed to over $600 million.
So, does BTC.D actually capture the story?
As publicly traded companies adopt Bitcoin treasury strategies to capture the stock price premium, this distorts the true dominance of Bitcoin demand compared to other cryptocurrencies. Yes, corporations put pressure on Bitcoin price when they purchase it. But they arn’t minting new tokens or any other asset whose value would reside on-chain. Meanwhile the premium to NAV continues to go up.
If we were to squint and handwave a bit, and include entirety of Microstrategies’ market cap into the overall BTC.D chart, we would add another ~$50 billion to the Bitcoin market, increasing Bitcoin’s dominance from 56.9% to 57.5%, or 50 basis points.
So what? Well, maybe BTC.D doesn’t matter as much as it use to. Time will tell!
