Bitcoin's Rising Dominance: Trust in Fixed Rules

Bitcoin dominance — its share of the total cryptocurrency market cap — hit 65% in May 2025, the highest in over four years.

The cryptocurrency market continues to be defined by volatility and uncertainty, leading to a preference for assets with fixed, predictable rules. As institutions and states seek stability in a financial landscape where digital assets can be adjusted, frozen, or reprogrammed, Bitcoin is emerging as a strategic asset.

This week, Block (formerly Square) disclosed a new Bitcoin purchase, adding to the growing number of public companies holding the cryptocurrency on their balance sheets. Meanwhile, U.S. states are also exploring Bitcoin reserves, highlighting a broader interest in safeguarding value against economic uncertainty.

Moreover, institutional inflows into spot Bitcoin ETFs are surging, signaling a shift toward recognizing Bitcoin as a reserve asset with predictable rules. These institutions are buying the underlying asset on exchanges, rather than investing in products that track Bitcoin's price without direct ownership.

Finally, the European Central Bank is expected to make a final decision on the digital euro by late 2025, positioning it as a state-backed alternative to private stablecoins.

Here’s a closer look at what's happening with Bitcoin, stablecoins, and central bank digital currencies (CBDCs).

Bitcoin's Rising Dominance: Trust in Fixed Rules

Bitcoin's dominance—its share of the total cryptocurrency market cap—hit 65% in May, the highest in over four years. This marks a return to high levels of dominance last seen in 2019, showcasing a preference for the world's leading cryptocurrency among investors.

This shift is highlighting a broader theme in the crypto market: a preference for assets with fixed, predictable rules in a landscape of volatility and uncertainty.

While many crypto assets adjust supply schedules, alter monetary rules, or engage in activity to maintain price levels, Bitcoin's framework remains consistent. Its issuance schedule is defined, and the network continues operating according to predefined rules.

This predictability is what differentiates Bitcoin in a market where other assets can be adjusted or optimized. For instance, Ethereum's shift to proof of stake in 2022 fundamentally changed the nature of the asset, and it has since dropped 74% against Bitcoin.

However, despite this decline, Ethereum's price has dropped even more sharply against the dollar—having fallen 79% since August 2022. This indicates that investors may be reconsidering the stability of assets that can adjust their supply schedules or consensus rules.

But the rise in Bitcoin dominance isn't just about crypto; it also reflects broader economic uncertainty, where investors are seeking assets with rules that don't change, even as monetary systems become more programmable and open to manipulation.

Adjustability and Uncertainty

While Bitcoin's dominance is rising as investors seek assets with fixed frameworks, the broader crypto market takes a different approach—one of adjustability and optimization.

Projects tweak supply schedules, modify consensus mechanisms, or issue new tokens to attract capital. The ability to pivot is often framed as a feature—offering more flexibility, faster scalability, or the capacity to adapt to changing market conditions.

Yet, when the rules can change, so can the value. A token's supply might increase unexpectedly, diluting existing holdings. Governance structures might shift, introducing new risks. The ability to alter the rules introduces uncertainty, especially in a market defined by speculation and hype.

Bitcoin, however, doesn't adjust to fit new narratives. Its rules are fixed—a contrast to assets that can be altered, restructured, or inflated. As investors retreat to predictability, Bitcoin's rising dominance reflects this preference for an asset that doesn't change with the market's whims.

Stablecoins: Practical Solutions, Centralized Risks

In a world where local currencies are volatile, banking infrastructure unreliable, and financial systems can be fragile, stablecoins have become a financial lifeline.

In 2024, Tether (USDT) alone facilitated over $20 trillion in transaction volume—a staggering figure that showcases the incredible demand for stable, fiat-pegged assets in unpredictable markets.

For people facing hyperinflation, currency devaluation, or limited access to financial services, holding digital dollars can feel like a safe haven. It provides a measure of stability in a chaotic economic landscape.

But that stability is relative. Stablecoins may hold their peg to the dollar, but the dollar itself continues to lose purchasing power over time. This matters because, ultimately, stablecoins are pegged to fiat currencies, inheriting their strengths and weaknesses.

The trade-off is clear: stablecoins may protect against local currency collapses, but they're still controlled by centralized issuers who can freeze assets, blacklist addresses, or comply with regulatory orders. In 2024, multiple incidents of frozen USDT accounts occurred, highlighting the vulnerabilities of relying on assets that can be halted or confiscated at will.

While stablecoins might be less volatile than Bitcoin in the short term, their stability comes with conditions: issuer control, regulatory risk, and exposure to fiat's inflationary drift. While they can provide a temporary hedge