Bitcoin dominance is at 60%, and the current monetary-policy setup is keeping the measure elevated. The Fed funds rate is below the two-year Treasury yield, so policy is not yet as restrictive as it was from late 2022 through early 2026. Still, the analysis expects rates and the dollar to move higher, creating a potential near-term tailwind for Bitcoin dominance.
Why it matters
Bitcoin dominance rose as restrictive policy took hold in the previous cycle, but the current cycle may follow a different path. The view presented is that dominance could rise for part of the cycle rather than advance continuously from start to finish.
A key measure is the gap between the Fed funds rate and the two-year yield. Current expectations suggest the Fed funds rate could reach about 4.75% by April, while the two-year yield is around 4.8%. If the two-year yield falls after the midterm elections while the Fed continues raising rates, policy could become restrictive sooner than expected.
The dollar is another part of the setup. The US dollar index has formed higher lows during 2026, and its path during the current presidential term is being compared with the pattern seen in 2018. A stronger dollar and higher rates would generally make a sustained altcoin rally more difficult.
Market impact
Bitcoin dominance including stablecoins has remained firm, while the measure excluding stablecoins has weakened recently. Stablecoins have become less of a drag on dominance because the altcoin market has not produced gains large enough to significantly reduce Bitcoin's share of total crypto market capitalization.
The analysis expects dominance to retest highs from 2025 before eventually moving lower. If higher rates filter through to the economy and policy turns looser, Bitcoin dominance and the dollar could decline while altcoin pairs recover. That shift is viewed as a later-cycle possibility, not the short-term outlook.
Frequently asked questions
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Why could Bitcoin dominance rise in the short term?
Higher interest rates and a stronger dollar can make a broad altcoin rally more difficult. That may keep capital concentrated in Bitcoin and support its share of total crypto market capitalization.
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How does the Fed funds rate compare with the two-year yield?
The Fed funds rate is currently below the two-year Treasury yield. The analysis says the relationship could become more restrictive if the Fed raises rates while the two-year yield declines.
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What role could the US dollar play in Bitcoin dominance?
The US dollar index has formed higher lows during 2026. A stronger dollar, combined with higher rates, could create a less favorable environment for sustained altcoin outperformance.
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Why is Bitcoin dominance different when stablecoins are excluded?
Dominance including stablecoins has remained firm, while the measure excluding stablecoins has weakened recently. Stablecoins have become less of a drag because altcoins have not gained enough to materially reduce Bitcoin's market share.
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When could altcoins begin to outperform Bitcoin?
The analysis places that possibility later in the cycle, after higher rates filter through to the economy and monetary policy becomes looser. Easier policy could support altcoin pairs and reduce Bitcoin dominance.
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