Bitcoin Dominance Defies Pattern During 30% Decline, Dropping Instead of Climbing

Bitcoin BTC$90,808.55 has now tumbled 30% or more three times in the current cycle. The latest stands out in terms of how BTC's dominance behaved during the correction — falling rather than rising, as usually happens.

BTC dropped to nearly $80,000 late last week, a 36% decline from October's all-time high above $126,000. The downturn was part of a wider deleveraging across the crypto market characterized by relative resilience in alternative cryptocurrencies (altcoins).

Bitcoin dominance, which measures bitcoin’s market capitalization relative to the total crypto market, typically ticks higher during broad crypto sell-offs because riskier tokens tend to fall faster than bitcoin.

That's exactly what happened in October, but since the start of November dominance dropped. Even during the recent rally to $90,000, dominance fell from 61% to as low as 58.5%. While it's recovered to just over 59%, in most risk-off environments dominance climbs more decisively than this.

The contrast becomes clearer when looking at the two prior corrections. Between February and May, during the "tariff tantrum" sell-off, bitcoin dominance rose to 65% from 58%. And during August 2024's yen carry-trade unwind it climbed from 56% to 60% through November.

While the latest bitcoin price pullback was similar in percentage terms, its dominance rose less strongly, suggesting bitcoin was hit harder than the broader crypto market.

This time round, the price fell a lot faster, too, covering 47 days from peak to trough. That compares with 77 days during the tariff tantrum and 146 days in 2024, which added to the max fear sentiment.

Taken together, the speed of the drawdown and the drop in bitcoin dominance show that this correction broke from the pattern of the previous two in this cycle. With bitcoin now at the end of a typical four-year cycle, the question is whether falling dominance signals further weakness.