PRO | Will $BTC Outperform Altcoins This Cycle?

The king has returned. 👑

Earlier this month, Bitcoin surpassed its previous all time highs from 2021.

$ETH, $SOL and many other assets are still lagging Bitcoin, yet to reach their own all time highs.

In fact, the Bitcoin Dominance (Bitcoin’s % market cap vs the total crypto market cap) continues to hold strong. 

After hitting its cycle low in September 2022 at 38%, it has been on a steady incline ever since, reaching as high as 55%.

At 55%, many, including our team, called the top of Bitcoin dominance and shared that it’s time for $ETH and other assets to start to outperform.

However, $BTC has held strong as of late and remains near its local high, sitting at 54%. This has got plenty of folks thinking we're heading into a Bitcoin-led cycle.

A lot of the speculation points towards the Bitcoin ETF as the turning point that really sets Bitcoin apart from the rest, making this cycle all about Bitcoin.

As we’ve expressed many times in our PRO reports, crypto cycles generally work in phases, where money flows first to Bitcoin, then to Ethereum, then to other assets farther down the risk curve.

$BTC → $ETH → Altcoins → NFTs.

Will this cycle be different? Will Bitcoin continue to outperform this entire cycle for the first time?

Maybe! There is a serious supply shock happening right now with Bitcoin that could send $BTC to levels that most people aren’t prepared for.

In today’s PRO report we’re going to dive into the bull case for Bitcoin and look into what’s brewing in crypto’s largest asset. 

We’re going to get clear on the economics and tokenomics of Bitcoin and understand the demand factors that may influence the price of Bitcoin this cycle.

Let’s get into it. ⏬

Bitcoin Tokenomics (Supply Side)

Bitcoin's total supply is of course capped at 21 million $BTC, and so far, 19,667,056 have been minted…

Bitcoin has an inflation rate of 1.63% APY currently…

Which equates to about 900 new Bitcoin being mined every day…

In mid-April (less than a month from now), the Bitcoin Halving will occur, which will reduce Bitcoin’s inflation rate by 50%, meaning that only around 450 Bitcoin will be mined daily.

On this alone, if you do the simple math, assuming that demand stays the same and the new supply is cut in half, technically the price of Bitcoin should double. 

Based on Bitcoin’s current price, this would assume a fair value of $140k/Bitcoin after the halving.

Of course, markets are never that simple. It’s not all about the new supply and demand. 

We also need to understand the dynamics around who is holding the current supply and what they are doing with their assets. If the current holders begin selling at the same time, then the assumed number would no longer hold true.

So let’s look onchain to see what we can learn about the existing holders…

Dynamics of Current Bitcoin Holders

To start, as we can see in the chart below, we can track the likely lost supply of Bitcoin, which equates to almost 1.5 million $BTC or 7% of the total Bitcoin supply.