BTC dominance sits at 60% and is framed as likely to rise again in the short term as policy stays restrictive or moves back that way. The core setup is a repeat of the last cycle: when the Fed funds rate sat above the 2-year yield from late 2022 into early 2026, dominance surged; with the spread now less restrictive, a near-term push higher is still expected before any larger-cycle rollover. The longer-term call is not for endless BTC dominance strength: if rates later fall hard, the dollar weakens and dominance can slide toward the low 50s or upper 40s, but only after a 2025-style retest of the highs.
BTC dominance is at 60%.
Tighter monetary policy is the driver behind the call for BTC dominance to rise, using the Fed funds rate vs the 2-year yield as the restriction gauge.
From late 2022 through early 2026, the Fed funds rate stayed above the 2-year yield, marking restrictive policy.
BTC dominance bottomed before policy turned restrictive, then started rising as policy became restrictive.
Current policy is less restrictive because the Fed funds rate is below the 2-year yield.
BTC dominance is argued to have put in a high in summer 2025 before policy became more accommodative.
Policy is now heading back toward a more restrictive stance, which implies BTC dominance should move up again.
Rates have already started to rise, but the move into clearly restrictive Fed funds territory is not expected quickly; the Fed funds rate may take until about April to reach 4.75% while the 2-year yield is around 4.8%.
If the 2-year yield rises a bit more and then falls after the midterms while the Fed keeps hiking, restrictive policy could arrive sooner than mid-2027; a 4.25% Fed funds rate vs a 4.5% 2-year yield would be much closer to restrictive.
The Dixie has higher lows in January, May, and August and is treated as bullish into 2026.
The dollar is mapped to the presidential-term pattern seen in both Trump terms: down in year one, then grinding up in the midterm year; 2025 is likened to 2017 and 2026 to 2018.
BTC dominance is not expected to rise for the entire cycle: it should hold generally into the next cycle, then fall later when rates drop hard, the dollar drops, and BTC dominance rolls over.
That later downside is described as potentially a year or two away; for now dominance is expected to go back up first and could need a retest of the 2025 highs before a durable top is in place.
A BTC dominance measure excluding stablecoins has been dropping recently, while the version including stablecoins is still rising; stablecoins are a headwind turned tailwind that keep dominance elevated.
Altcoin pairs are expected to keep grinding lower while monetary policy remains restrictive, then recover later in the cycle once policy loosens and the economy feels the lagged hit from higher rates.