A crypto market expert has cautioned that the United States government’s potential plan to acquire 5% of Bitcoin’s supply could lead to heightened short-term price swings if approved.
“If the strategic Bitcoin reserve gets the green light, I expect we’ll see significant volatility. Bitcoin may rally initially but could soon retrace,” said Ben Simpson, CEO and founder of Collective Shift, in an interview with Cointelegraph.
Bitcoin Dominance Could Decline
Following Donald Trump’s victory in the November 5 presidential election, Wyoming Senator Cynthia Lummis—an outspoken supporter of both Trump and cryptocurrencies—announced plans to push for legislation enabling the US government to purchase and hold 1 million Bitcoin for at least two decades.
Discussing market dynamics, Simpson highlighted a potential shift in Bitcoin’s market dominance, which measures the proportion of the total cryptocurrency market value held by BTC. He noted that Bitcoin’s dominance is likely to “decline,” and a rotation into alternative cryptocurrencies, or altcoins, appears to be underway.
“With Bitcoin consolidating around $100,000 and altcoins starting to gain momentum, the transition has already begun,” Simpson explained.
As of now, Bitcoin’s market dominance stands at 56.63%, having dropped 7.20% over the past month, according to TradingView data.
Crypto trader Momin echoed this sentiment to their 140,000 followers on platform X, predicting further reductions in Bitcoin dominance and suggesting that “altcoins could see significant gains in the coming weeks.”
However, Simpson tempered expectations, warning that the shift into an altcoin-dominated market wouldn’t happen smoothly. “It’s going to be bumpy—I don’t foresee a straight transition into an altcoin season,” he added.
Bitcoin’s Role in Institutional Portfolios
Bitfinex analysts believe Bitcoin’s appeal to institutional investors will endure despite potential pullbacks. They noted that many altcoins have yet to outperform Bitcoin in terms of returns, reaffirming Bitcoin’s status as a solid and competitive investment.
“Even if Bitcoin experiences short-term corrections, it will remain a key component of institutional portfolios, with interest continuing to grow,” Bitfinex analysts told Cointelegraph.
With Bitcoin prices surpassing $100,000, they pointed out that sustained demand has supported the current price levels. Any dips during the holiday season could present buying opportunities.
“Spot buying remains strong, leverage is at manageable levels, and any price corrections are likely to be short-lived,” the analysts said. They also reiterated that Bitcoin is increasingly seen as a viable alternative to gold and a reliable store of value.
Bull Market in Early Stages, Analysts Claim
Meanwhile, global investment firm VanEck reaffirmed its $180,000 price target for Bitcoin at the peak of the current cycle, as previously reported by Cointelegraph.
VanEck’s digital asset specialists Nathan Frankovitz and Matthew Sigel stated that the crypto bull market is still in its early stages, with more growth anticipated in the coming phases.
