Bitcoin dominance grows if the market cap of bitcoin increases compared to the one of alts, and shrinks if the market cap of bitcoin reduces compared to the one of alt coins.
To the changes in bitcoin dominance contribute both the relative price changes of BTC and alts, but also the relative inflation of new coins and tokens. Also, for alts, the newly created coins and tokens and their market cap contribute to the total.
That's why, despite the continuous price increase of BTC over time, its dominance is likely to continue to drop.
For example, in 2016, BTC had a dominance of 95%. By January 2018, it had sharply dropped to 35%, which was normal in an alt season. The next bull market, the ATH for BTC.D was at 73.57%, and then it dropped to 38.94% in the bear market.
It's interesting that compared to the 2016-2020 cycle, when the minimum BTC.D was at the end of the bull market during the euphoria of the alt season, for 2020-2024, the minimum was during the bear market, in the late summer of 2022, explainable by the collapse of Terra Luna and later FTX that year. While BTC price is going down, the price of stable coins isn't (oh well, except USDT), and they are counted as alts.
So, the bigger the stable coin market gets (and it does), the less likely it is for BTC to rise its dominance by squeezing value out of alts, since stable coins are alts too.
The max BTC.D this cycle has been of 64.26%, and is from this month, but has already dropped back to 61.14%, as you can see in the image:
The question is, would it attempt to push for a higher high in the future or that was its top this cycle?
To me it looks like the chart is definitely less violent than in the previous cycle, and having a tendency to flatten the curve and perhaps slowly reverse it soon enough.
Bitcoin has been traded relatively flat for 3 months, and practically without a heartbeat for two weeks, except for the small blip during the last few days. Was this small pullback enough to start another uptrend? We will see.
Many alts have taken a beating when BTC didn't seem to care, so if a rally starts, I believe the uptrend will be more violent for the alts as well, which obviously will make BTC.D go down.
What do you think will happen?