Bitcoin’s dominance (BTC.D), which has been at its highest since March 2021 this week, triggered a debate about an imminent short squeeze, which could drive its price upward. Joe Consorti from Theya’s Head of Growth, Joe Consorti took to X to warn of what he sees as a major turning point in Bitcoin versus other digital assets.
Bitcoins correlation patterns have taken a historic turn.
He is a postConsorti argues that Bitcoin’s recent market dominance and price have both risen simultaneously for the first 16-year period. Histoically, Bitcoin’s market dominance has risen initially and then waned as the speculation spread to altcoins. However, Consorti states: “This is the first time in history that bitcoin’s share of the total digital asset market is rising while its price is climbing. In past cycles, retail-driven speculation pushed bitcoin’s price up and later funneled money into altcoins, causing bitcoin dominance to decline. That dynamic is gone.”
Consorti believes that the days of a large altcoin rally following Bitcoin’s initial rise are over. Bitcoin dominance recently touched 64%—its highest level since February 2021. Consorti attributes it to an important change in the market’s participation. “This cycle, institutions, sovereigns, and long-term holders are leading the charge, increasingly allocating capital exclusively to bitcoin while largely ignoring the rest of the market.”
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Consorti describes the “turbulence” that occurred in last week’s markets as “the single-largest liquidation event in ‘crypto’ history,” citing data that more than $2.16 billion in positions were wiped out within 24 hours. Ethereum led the liquidation figures with $573 million, and the largest single liquidation—a $25.6 million ETH/BTC order—occurred on Binance. “As you might have guessed, ETH/BTC is not having a great time,” Consorti notes, pointing out that the ETH/BTC pair is trading at 0.026—its lowest level in over three years.
The he says that these liquidations show the fragility of altcoins markets with high leverage. “All of it wiped out in an instant when price moved against them. This wasn’t your standard technical correction, it marks the start of an extinction-level event for altcoins.”
You can also find out more about the following: “Altcoin Casino” Crisis
Consorti’s analysis indicates that what he calls “the ‘consorti effect'” is actually the ‘consorti phenomenon. “the altcoin casino” It is collapsing. He points to failed narratives around popular projects—Ethereum, Solana, and DeFi among them—that have struggled to maintain investor confidence: “Altcoins have survived purely on narratives. Each cycle, a new batch of narratives emerged, promising world-changing innovation. None of them lasted.”
Bitcoin, he says, is a core product that does not require marketing. “Bitcoin, on the other hand, doesn’t need a narrative. It doesn’t need marketing or hype. It exists, and it thrives because it was built to do one thing—protect wealth in a world of perpetual monetary expansion.”
Consorti mentions Ethereum as well “merge” and its supposed deflationary design, pointing out that since the upgrade, ETH’s total supply has increased by 13,516 ETH—undermining the “ultra-sound money” claim.
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Consorti highlights Senator John Boozman’s remarks at the White House Crypto Working Group’s inaugural press conference. “Some digital assets are commodities, some are securities.”
It is, he says, an acknowledgement that Bitcoins are different from all other digital assets. In a further development, Consorti cites a comment from White House AI & Crypto Czar David Sacks, who mentioned the group is evaluating the viability of a Strategic Bitcoin Reserve—a shift from the previous “National Digital Asset Stockpile” terminology used under a Trump-era executive order.
Consorti frames the issue as an a “major development” Bitcoin is becoming increasingly popular as a result of its unique features. “This language shift is monumental. A few years ago, the US government was openly hostile toward bitcoin. Today, they’re discussing stockpiling it.”
Consorti believes that amid this turmoil, the next big move for Bitcoin may be an explosive squeeze of shorts. Consorti notes that the funding rates of perpetual futures are now lower. “deeply negative,” This is reminiscent of the time when Bitcoin was trading near $23,000 per coin in August 2023. This implies a tilt in leverage toward traders betting against Bitcoin—a position that could rapidly unwind: “While last week’s leverage flush wiped out most long positions, the next major move could be the opposite—an explosive rally fueled by forced short liquidations.”
Should the market turn against these short-sellers, the forced buy-backs could drive the price higher with unusual speed and volume—especially if overall liquidity remains thin. He concluded: “Traders who overextended their leverage to short bitcoin will eventually have to buy it back when the price moves against them, just like overleveraged longs were wiped out last week. Bitcoin is coiled. The stage is being set for a potential short squeeze. The longer this dynamic of short dominance persists, the greater the risk of a forced shirt liquidation cascade that sends bitcoin’s price higher with force.”
BTC.D is currently at 61.19%.
Featured image was created with DALL.E chart by TradingView.com
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Source: www.newsbtc.com
