Let's be blunt: those dreams of overnight riches fueled by the next Shiba Inu? They're on ice, at least for now. And the culprit? Bitcoin's relentless dominance. I'm seeing a chilling consolidation of power, a digital monarchy if you will, and here's why your altcoin portfolio might be feeling the squeeze.

Institutions Still Cling To Safety

Consider Bitcoin the crypto universe’s version of a blue-chip stock. It may not provide the highest, sexiest returns, but it’s seen as by far the safest wager. That perception, particularly among institutional investors, is a formidable crag. Far from my point of view in Tokyo, I’m witnessing Japanese institutions, usually very cautious in disposition, take the first move into Bitcoin. Crypto is crypto, and Bitcoin is the natural, regulator-approved kiddie pool to dip your toes into.

Attraction often comes down to this idea of comfortability and regulatory comfort. The Financial Services Agency has been very explicit about its aversion to Bitcoin. Altcoins remain under a stormy shroud of uncertainty on all fronts. The uncertainty drives institutions to double down on safer bets. This self-fulfilling behavior increases Bitcoin’s already-greater market cap and propels its own growth further.

Look at the numbers. Exact numbers are still under lock and key, but the trends are suggested anecdotally. According to industry reports, the majority of institutional crypto investments in Japan are focused on Bitcoin. This tidal wave of capital has fortified Bitcoin’s position, causing altcoins to flounder and many to perish. This experience is reminiscent of the internet’s infancy. They had the time and focus to exploit opportunities rapidly, while established companies were slow to adopt new technologies and lost enormous markets. Don't let regulatory inertia be your undoing.

Altcoin Liquidity? More Like Mirage

Picture yourself trying to flee a fire in a high-rise building, but you discover that all the stairs are locked shut. That’s the painful truth that many altcoin investors are facing at the moment. Bitcoin sneezes, altcoins catch a cold – a liquidity cold.

During recent Bitcoin rallies, we've seen a disturbing trend: investors panic-selling their altcoin holdings to chase the Bitcoin surge. This sets off a domino effect, as liquidity continues to dry up and asset prices crash. Suddenly, that promising altcoin you were so excited about is now impossible to move without taking a bath on it.

I have indeed witnessed it happen firsthand to many altcoins that were the talk of the town in 2021. Remember them? I won’t call these folks out by name to avoid any additional destruction. Their share of the trading volumes has dropped to mere percentages of the digits they used to handle. The sell side order books are very thin, so even a not-very-big sell order could set off huge price fluctuations. Increasing volatility from low liquidity adds to the narrative of altcoins as speculative assets. As a result, investors have rushed back to the perceived safety of Bitcoin. It's a vicious cycle.

This isn’t merely a reaction to price action, but rather to the very fundamental market structure. For many altcoins, there simply isn’t the institutional backing or trading infrastructure seen by Bitcoin. The crux of the problem is that they’re vulnerable, exposed to the market’s fickle whim. In uncertain times, that vulnerability can be a fatal flaw.

Bitcoin Maximalism: A Zombie Rises

As you may have noticed, the crypto space has been rife with scandals and implosions. From FTX to Terra, the aftermath has been catastrophic. And in the wake of these disasters, a familiar ideology has resurfaced: Bitcoin Maximalism.

This isn’t merely a belief in Bitcoin, it’s an active rejection of everything else. Bitcoin Maximalists refuse to accept that any altcoin isn’t a scam or vaporware. They view them as misdirections from crypto’s real intent. They preach the gospel of Bitcoin, not just as a speculative vehicle but as the one true decentralized currency, and their message is gaining traction.

Why? Because fear sells. Having been burned by previous altcoin projects, many retail investors are understandably trepidatious. The Bitcoin Maximalist narrative offers a simple, comforting solution: stick with Bitcoin, the only proven and trustworthy cryptocurrency.

This feeling is exacerbated by social media, where Bitcoin Maximalists are loud and impactful. They repeat misinformation about other altcoin projects, farming FUD (fear, uncertainty, and doubt) and helping to create the narrative of Bitcoin’s superiority. This results in a formidably dark echo chamber, in which all dissent is crushed with extreme efficiency and effectiveness, leaving the Bitcoin Maximalist narrative to dominate absolutely.

Here's the thing: while skepticism is healthy, outright rejection of innovation is dangerous. The crypto space, arguably more than any other space, requires experimentation and competition to continue innovating. The return of Bitcoin Maximalism is killing innovation. It’s doing way worse too. It’s creating a climate of fear that is crushing the growth of potentially groundbreaking altcoin projects. History is about to repeat itself once again. As with the equities carnage in the dot-com bubble, very few companies will make it out this time, but the internet will, thanks to unquenchable innovation, continue to flourish.

So, what's the takeaway? The road to altcoin riches is temporarily closed with Bitcoin’s heavy hand. To be sure, these prices are being propelled by institutional inertia, liquidity squeezes and the return of Bitcoin Maximalism.

The RSI was over 70, which is typically a sign of overbought conditions and strong momentum. The Dragonfly Doji may be an indication of a pause. A close above 65.65% will provide confirmation for continuation of Bitcoin dominance.

So it may not be checkmate yet for altcoins, but it will be an undeserved uphill battle. To be successful, you have to be pragmatic, strategic and in it for the long term. And maybe, just maybe, start requiring more regulatory clarity to truly level the playing field. Because at the moment, the deck is completely stacked against you.