The conception of Bitcoin as "digital gold" and store of value derives from Satoshi Nakamoto's original whitepaper (2008) and subsequent economic analysis. Key arguments supporting this thesis include:
Empirical studies (Wójcik, 2020; Hanley, 2018) suggest that institutional investors increasingly perceive Bitcoin in store-of-value terms, similar to gold in hedging portfolios. The approval of spot Bitcoin ETFs in 2024 marked a watershed moment, formalizing Bitcoin's role in traditional finance and catalyzing substantial inflows and assets under management throughout 2024–2025.
Market data documents a dramatic empirical phenomenon: In 2017, Bitcoin dominance fell below 40% as total altcoin count exceeded 1,500 (Coinbase Research, 2018). During the 2021 peak "alt season," BTC.D compressed to approximately 40% while DeFi and NFT tokens generated over $100 billion in market capitalization. Conversely, during the 2022-2023 bear market, Bitcoin dominance recovered to ~50% as most altcoins lost 80-99% of their value (CoinMarketCap, 2023).
These observations suggest that CDE exhibits strong cyclical modulation atop longer-run structural pressures, implying potential for natural self-regulation through market forces.
The term "alt season" refers to periods when speculative capital massively rotates from Bitcoin into altcoins, generating extraordinary returns for altcoin investors while simultaneously depressing Bitcoin dominance. Technical studies (Hirshleifer & Shumway, 2003; Schachter & Siddarth, 2021) document that speculative cryptocurrency bull markets are driven by:
During bear phases, capital returns to Bitcoin as a "safe haven" asset, driving BTC.D recovery. This cyclical pattern suggests inherent market stabilization mechanisms. The Altseason Index, which tracks how many of the top 50 altcoins outperform Bitcoin over a 90-day rolling period, provides quantitative measurement of these cycles. XBTFX (2025) reported the index recently breached the key 75 threshold, indicating that a significant majority of top-performing altcoins were outpacing Bitcoin. Bitget data (Nov 2025) shows 54 of the top 100 cryptocurrencies outperformed BTC in the past 90 days—a 54% rate that falls short of the traditional 75% "alt season" designation, suggesting the market is in a transitional phase between Bitcoin dominance and full altcoin rotation.
Proponents of government regulation (Rogoff, 2023; International Monetary Fund, 2023) argue that regulatory frameworks—including registration requirements, audits, and disclosure mandates—would reduce fraud incidents and "rug pulls" (projects where founders abscond with investor capital), strengthen market stability, and enhance consumer protection. The European Union's MiCA (Markets in Crypto-Assets) regulation exemplifies this interventionist approach.
Self-regulation advocates (Ammous, 2018; Antonopoulos, 2014) argue that cryptocurrencies emerged as a decentralized alternative to government-controlled financial systems (cypherpunk ideology). They contend that rigorous regulation may stifle innovation and lead to regulatory arbitrage (project migration to less-regulated jurisdictions). Risk, they argue, is a natural element of innovation; investors should bear responsibility for project verification. The market self-regulates through: (a) failure of weak projects, (b) capital migration to quality, and (c) cyclical corrections.