Since late February, the Bitcoin dominance percentage, the Bitcoin (BTC) market cap divided by the total crypto market cap, has surged from 62.5% to 67.5% with most of this increase happening in the last few weeks. This could be an omen of what is to come as Bitcoin (BTC) becomes more scarce following today’s block halving.
As described by the stock to flow model, the main impact of the Bitcoin (BTC) block halving is that Bitcoin (BTC) becomes more scarce, since the rate of freshly mined Bitcoins (BTC) is reduced by 50%.
When an asset like Bitcoin (BTC) becomes more scarce it becomes more valuable, both because people hoard it more due to its scarcity, and due to simple supply and demand. The supply side of the equation decreases which forces the price to increase.
Zooming out, even ahead of the halvening people are buying up Bitcoin (BTC) more than other cryptocurrencies. Bitcoin (BTC) is about to become much more scarce and this preferential buying of Bitcoin (BTC) over other cryptocurrencies should only accelerate after the halvening.
Another way to look at it is that although other cryptocurrencies will come along for the ride and rise substantially if Bitcoin (BTC) sees a major halvening rally this year, based on this trend, Bitcoin (BTC) will likely rise more than most other cryptocurrencies if a halvening rally happens.
On a final note, in the past Bitcoin’s dominance percentage was in the 85-95% range before the big altcoin boom, and it seems possible that Bitcoin (BTC) will rise back into that range if Bitcoin (BTC) rallies to all-time highs in the months after the halvening.