Bitcoin's Potential Reinforcement Emerges as Q4 Beckons Amid September Setup

In the ever-evolving world of cryptocurrency, Bitcoin continues to hold its ground as the undisputed leader. According to Benjamin Cowen, founder of IntoTheCryptoverse, Bitcoin dominance appears to be close to bottoming out, setting the stage for a potential resurgence.

Cowen believes that the price movement of Bitcoin, whether it rises, dips, or trades sideways, could lead to an increase in Bitcoin dominance. If Bitcoin rises and bounces from its 20-week simple moving average (SMA), capital may rotate out of altcoins and into Bitcoin, similar to the pattern observed in 2017. On the other hand, if Bitcoin drops toward the 50-week SMA, altcoins would typically fall harder, lifting Bitcoin's dominance, as seen in late 2024 and early 2025. Even if Bitcoin consolidates sideways near the 20W SMA, altcoins usually bleed value slowly, again raising Bitcoin's share of the market, as seen in 2020.

This trend is not surprising given the conservative financial institutions that are only beginning to adopt Bitcoin as a store of value. While altcoins like XRP show occasional strength, they underperform long-term against Bitcoin, indicating Bitcoin's continued future dominance in the crypto market.

Recent developments suggest that this dominance could become even more pronounced. Money has been shifting out of Bitcoin and into Ethereum, but Cowen predicts a potential reversal. Institutional flows into Ethereum ETFs are outpacing those of Bitcoin, but Cowen sees this as a temporary phenomenon. He suggests that the current market situation could set up a "final rotation" back into Bitcoin, where Bitcoin once again takes the lead role.

September is usually a weak month for Bitcoin, but traders suggest that ETF inflows and improving liquidity could flip the script this year. At the time of writing, Bitcoin is trading at $110,234, according to CoinMarketCap data, with gains of 2.74% in the last 24 hours.

In a recent analysis, Cowen outlined three historical scenarios that favor Bitcoin. The first scenario is a "bullish breakout", where Bitcoin rises significantly and pulls altcoins along with it. The second scenario is a "bearish rejection", where Bitcoin fails to break out and altcoins outperform, leading to a decline in Bitcoin's dominance. The third scenario is a "consolidation", where Bitcoin trades sideways and altcoins slowly lose ground, further increasing Bitcoin's dominance.

Despite the potential for a "final rotation" back into Bitcoin, Cowen warns against ignoring the potential moves of "whales", large investors who can significantly influence the market. For instance, whales selling BTC to buy ETH could potentially shift the market dynamics.

In conclusion, the crypto market is poised for a potential shift in favour of Bitcoin. Whether this shift materialises remains to be seen, but with conservative financial institutions adopting Bitcoin and the potential for a "final rotation" back into Bitcoin, it's clear that Bitcoin's dominance is far from over.