Bitcoin may ‘pump then rotate back’ if US strategic reserve gets approved

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A crypto analyst has warned that if approved, Senator Lummis’ proposal for the United States government to acquire 5% of Bitcoin’s supply could cause increased price volatility in the short term.

“I expect it to be pretty volatile, especially if the strategic Bitcoin reserve gets approved; I think Bitcoin will pump then probably rotate back,” Collective Shift founder and CEO Ben Simpson told Cointelegraph.

Bitcoin dominance will “start to fall”

Cointelegraph recently reported that after Trump’s winning the presidential election on Nov. 5, Wyoming Senator Cynthia Lummis — a Trump supporter, Republican and crypto advocate — said she would move forward with legislation for the US government to buy 1 million Bitcoin (BTC) and hold it for at least 20 years.

As for the current market state, Simpson believes that Bitcoin dominance — a measure of how much of the crypto market’s total value belongs to BTC — will “start to fall” and the “rotation” into altcoins has “actually begun” after Bitcoin started consolidating “around $100,000” and altcoins started “to climb.”

At the time of publication, Bitcoin dominance is 56.63%, down 7.20% over the past 30 days, according to TradingView data.

Crypto trader Momin told their 140,000 X followers on Dec. 13 that they “expect this downtrend in dominance to continue and possibly see alts run pretty hard in the coming week.”

However, Simpson believes transitioning into altcoin season won’t be so straightforward.

“I think it will be pretty volatile; I don’t think it will be straight into altcoin season,” he added.

Bitcoin will continue to be “part of the portfolio” for institutions

Meanwhile, Bitfinex analysts told Cointelegraph that based on returns, many altcoins have not yet breached new all-time highs in terms of their return against Bitcoin, “hence proving that Bitcoin had always been a fruitful and competitive investment, even when compared against Altcoins.”

“We believe that even post any pull back, Bitcoin will continue to be part of the portfolio of major institutions and that interest in Bitcoin will continue to grow,” the analysts said.

Bitfinex analysts said that with Bitcoin now surpassing six figures, as long as it maintains strong demand, any upcoming dips will be short-term and possibly a buying opportunity for investors:

“At a price of 100K, there has continued to be sufficient spot buying to sustain this level, and currently, leverage levels are reasonable, so even if a dip occurs, which won’t be surprising during the holiday season, the price trend is healthy and shows reasonable strength in the market for any dip to be bought.”

“Believers in Bitcoin are also becoming more adamant about the asset being a perfect substitute for gold and a true store of value,” Bitfinex analysts added.

On Nov. 23, Cointelegraph reported that global investment manager VanEck had reissued its $180,000 price target for Bitcoin at the current cycle’s peak.

VanEck digital asset analysts Nathan Frankovitz and Matthew Sigel said the next phase of the crypto bull market is only “just beginning.”

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