It is alt-coin season? Bitcoin is taking back market share?
These are some of the headlines we see posted periodically regarding the crypto market. When it comes to this sector, we see the Bitcoin versus alt-coin debate.
Throughout the history, Bitcoin's dominance is unrivaled. It has consumed the largest segment of the total market cap, often topping 60%. The expectation is that, over time, this will continue to decline, a position I have occasionally espoused.
So far, the decline is slow. Nevertheless, alt-coin advocates maintain that its "season" will come. With the "trickle-down" effect happening in crypto, this could well the case.
In this article I will go through some of what is taking place at the fundamental level to see if we can garner any insight into how things will look in the future.
When it comes to the alt-coins versus Bitcoin debate, I am on the side of the former. This does not mean that I foresee any individual alt-coin topping BTC.
Actually, this is nothing more than a numbers game. It is also combined with network fundamentals which will push the alt-coin segment to astounding heights.
What I am referring to is more than simple market activity. Naturally, that is part of the equation as we are using things such as market capitalization as the metrics. That said, when we look at other associated standards, we can see how Bitcoin falls behind.
Eric Trump made news this week with his proclamation that Bitcoin would reach $1 million. This is just another personality in a long line to put out this forecast. Cathy Wood of Ark Invest made this forecast a number of years back. At the same time, Michael Saylor long held this as a base level for the price of BTC.
On the "flip" side, we have the flippening. The Ethereum maxis believe that, at some point, ETH will surpass BTC in market cap. This is something that could happen although its likelihood is not great in my opinion.
It does not detract from the fact that ETH has a very bright future and could end up consuming an even greater share of the total crypto market cap.
A challenge I have with Bitcoin is that we are not seeing the same amount of building as we do with the alt-coins. Some might take exception with this since Wall Street is going gangbusters with financial products related to Bitcoin.
The idea that it is exclusive to BTC is short-lived. Large financial institutions are already moving into other coins, such as ETH and SOL. There are rumors that a Solana ETF is nearing approval by the United States SEC.
For a full grasp of this debate, I think moving to the technical side of things is crucial. Crypto is digital which means the laws of IT are in play.
Underlying crypto are blockchain networks. When looking at base coins, it is the activity associated with the network which ultimately matters. The sole exception, of course, if Bitcoin. To be frank, nobody cares what is taking place on the network since Bitcoin is a brand. It is actually a rather poor network, making it useless for most real world applications.
Markets do love BTC though and this cannot be ignored.
They are also waking up to Ethereum. People like Tom Lee see the remaking of the global financial system. Finance is now resident on networks. If Lee is correct, Ethereum is the choice for major institutions (Wall Street). This is starting with the stablecoin market but rapidly spreading to the tokenization of real world assets.
Activity of this nature drives value. What are the stock exchanges worth? By this, I am not considering the market caps of all the stocks but, rather, the exchanges themselves. Then we have to add in the piping related to the global banking system. What value does that carry? Next we consider payment systems (networks) such as Visa and Mastercard.
As we can see, this all starts to add up.
My view is we will not see this on Bitcoin. Instead, the EVMs and other blockchains will pick up the transactions. We can also couple this with other applications such as data storage, social media, and governance.
Probably the biggest driver of the alt-coin explosion is the fact we are going to have all kinds of networks tokenized. When we think about it, X and Facebook are really networks. The application on top is tied to the server system that is built. It houses the data which is them extracted as needed.
What happens when AI agents and other applications are built? Many of them will carry some type of value, eating into Bitcoin's dominance. For many, it might only be a couple million. However, if we look at Nvidia and its $4 trillion market cap, it does not command an overwhelming percentage of the overall stock value.
As things spread out and tokenization takes hold, there we will totals in the quadrillions. Even if BTC hits a $20 trillion market cap, this is minimal to a $1Q or $2Q tokenization market.
This is why alt-coins will explode. Again, it is a fair assumption that no single alt-coin could surpass BTC. From this perspective, Bitcoin might remain the leader.
That said, if we look at things from the view of total dominance, it will keep waning. We are only seeing the first steps in massive tokenization.
Money is going to have a lot of options when it comes to crypto. This is something to keep in mind.
