Bitcoin Dominance Surge: Altcoin Illusion?
Bitcoin Dominance: A Rising Tide?
Jan3 CEO Samson Mow predicts a continued rise in Bitcoin dominance, arguing that altcoin valuations are skewed by a psychological phenomenon known as 'unit bias'. His analysis shows Bitcoin dominance surpassing levels many analysts projected for late 2024.
Mow highlights that unit bias, the tendency to prefer owning a whole unit of an asset regardless of price, leads less experienced investors to favor cheaper altcoins over fractional Bitcoin ownership. He illustrates this by comparing the price of a 1/21,000,000th share of Bitcoin's total supply to equivalent fractions of other cryptocurrencies, removing the effect of differing total supplies.
Altcoin Valuations Under Scrutiny
Mow's calculations suggest that if adjusted for unit bias, Ether (ETH) would trade around $9,200, XRP at $5,800, and Solana (SOL) at $3,400 – representing massive percentage increases from their current prices. He concludes these adjusted prices are unrealistic, further supporting his Bitcoin dominance thesis.
This perspective is echoed by Sunny Po, a Bitcoin advocate, who states that "Unit bias is a core foundational framework of the normie mind. ‘Cheaper better.’" Mow adds that many altcoins leverage unit bias with artificially high total supplies, making it difficult for investors to accurately assess value.
Mow's analysis supports his forecast of significantly higher Bitcoin dominance. Historically, declining Bitcoin dominance signals altcoin season, but Mow believes this trend may be reversing.
Bitcoin Dominance: Current Status and Analyst Predictions
Currently, Bitcoin dominance sits at 63.66%. Many analysts predicted a peak around 60% in late 2024 before the start of an altcoin season, a prediction now seemingly challenged by current market trends.
In August 2024, Benjamin Cowen, founder of IntoTheCryptoverse, stated that he didn't expect Bitcoin dominance to climb back to 70%, suggesting a 60% target. This prediction, however, might need reevaluation in light of Mow's analysis.
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