Bitcoin Dominance Hits 65% Amid Geopolitical Tensions and Regulatory Crackdowns

Bitcoin’s market cap share has surged to 65%, marking its highest peak in 2025. This significant increase from January’s 55% level has created an uneven market structure, with Bitcoin dominating the total market capitalization at $1.98 trillion. In contrast, the total market cap of altcoins has shrunk to $1.06 trillion, experiencing a weekly decline of 12.3%. The exchange BTC balances have dropped to 2.14 million coins, approximately $140 billion, the lowest level since October 2020. Long-term holders, those holding for over 155 days, comprise more than 70% of the supply, indicating a continuous tightening of the supply.

Geopolitical tensions and regulatory crackdowns have driven significant capital into Bitcoin. The escalation of conflicts in the Middle East pushed oil prices to $98 per barrel, while hawkish statements from the Federal Reserve suggested only one rate cut this year. This environment has accelerated the flow of global capital into “digital gold,” with Bitcoin spot ETFs seeing net inflows of $11.3 billion in June. BlackRock’s IBIT achieved its highest single-day inflow since March, reaching $270 million. Additionally, Singapore’s expulsion of unlicensed exchanges has sparked a compliance panic, leading investors to shift toward SEC-regulated Bitcoin ETFs. These ETFs now manage over $78.8 billion in assets, with BlackRock holding 46%. Meanwhile, altcoins lack similar safe-haven channels, exacerbating their liquidity crisis.

Traditional finance giants have indirectly increased their positions in Bitcoin through shareholdings. MicroStrategy’s holdings exceeded 500,000 BTC, comprising 98% of its total assets. Coinbase’s stock prices rose 23% monthly, with a Bitcoin correlation reaching 0.65. This institutional flight into Bitcoin has left altcoins facing a liquidity crisis. The ETH/BTC ratio has dropped to 0.024, approaching yearly lows. If it breaks below 0.02, this may trigger DeFi leverage liquidation cascades. Altcoin daily total trading volume has shrunk to $18 billion, representing only 28% of Bitcoin’s volume. Among the top ten altcoins, seven show negative funding rates, with short position ratios exceeding 60%. This week, Sui (SUI) will unlock 44 million tokens worth $120 million, and Ethena (ENA) will unlock 40.6 million tokens worth $10.7 million. Historical data shows that tokens average a 15% decline after large unlocks.

The future scenarios for Bitcoin dominance are mixed. If the Federal Reserve starts rate cuts in September and Bitcoin breaks previous highs of $109,000, capital may overflow to ETH and other leading altcoins. The approval of ETH spot ETFs in Q4 2025 could push the ETH/BTC ratio back to 0.03. However, if Bitcoin dominance breaks 70%, it may squeeze altcoin survival space, triggering “death spirals.” Additionally, if the US “Beautiful America Act” fails to pass corporate tax cuts, this may weaken blockchain R&D investment, dragging down public chain ecosystems.

Investors are advised to maintain core positions in Bitcoin spot ETFs or compliant custody products to hedge macro risks. For satellite exploration, carefully select altcoins with strong fundamentals, focusing on on-chain activity and technical breakthroughs. It is recommended to stay away from high-unlock tokens, negative funding rate contracts, and platform tokens from regulatory gray areas.

The current market shift reflects broader institutional acceptance of Bitcoin as a legitimate asset class. Traditional finance increasingly views Bitcoin as digital gold rather than speculative cryptocurrency. However, this concentration creates systemic risks. The environment resembles 2017’s market dynamics, when Bitcoin dominance peaked before capital rotated into altcoins. Today’s regulatory landscape differs significantly, with institutional adoption providing stronger foundations but also concentrating risk.

Bitcoin’s technical momentum remains strong above $60,000 support. However, altcoins face critical junctures. Ethereum’s potential drop below $3,000 could trigger broader selling. Solana’s support at $120 becomes increasingly important. The next major catalyst likely comes from Federal Reserve policy decisions. Rate cuts could reignite risk appetite, benefiting altcoins disproportionately. Conversely, continued hawkish policies may extend Bitcoin’s dominance period.

Bitcoin’s 65% dominance represents both opportunity and warning. While institutional adoption validates the asset class, extreme concentration creates fragility. Investors must balance core Bitcoin exposure with selective altcoin positions. The market’s evolution toward traditional finance integration accelerates, bringing legitimacy but also changing risk profiles fundamentally. Success requires adapting strategies to this new paradigm while maintaining disciplined risk management. As this cycle progresses, those who understand both Bitcoin’s store-of-value narrative and altcoins’ utility potential will likely outperform. The key lies in timing and position sizing rather than binary choices between asset classes.