Altcoin season imminent? Bitcoin dominance falls to 4-year low despite BTC regaining $21k
Bitcoin’s (BTC) dominance continues to decline despite the number one digital asset registering a relief rally in recent weeks. In particular, Bitcoin dominance is a crucial metric for the crypto sector since it can have other implications for the possible price trajectory of most assets, especially altcoins.
In fact, as of November 5, Bitcoin market dominance had plunged to a four-year low of 38.67%. The digital asset last recorded a similar drop in market dominance on June 10, 2018, of 38.19%, according to CoinMarketCap data.
The drop is consistent with a historical premise indicating that when Bitcoin dominance falls with a rising value, it hints at a possible altcoin season.
Implications of Bitcoin market dominance fall
Bitcoin dominance is the ratio of the asset’s market value to the rest of the cryptocurrency market. Over the years, the calculation has proven to have different consequences for the entire digital asset sector. The calculation usually signals potential market outcomes and influences trading decisions.
Furthermore, amid a drop in Bitcoin’s price, and increasing dominance, the scenario usually points to a possible altcoin bear market. However, when both Bitcoin price and dominance fall, it could signal a potential bearish trend for the overall crypto market.
Additionally, when Bitcoin’s value and dominance rises, it is a potential bull market indicator, while if Bitcoin’s price rises with a declining dominance, it points to a possible altcoin bull market.
Bitcoin Rally Amid Declining Dominance
Interestingly, this is the case for Bitcoin’s current price path, having regained the $21,000 level, trading mainly in the green zone over the past 30 days. The asset is still trying to exit the bear market despite being weighed down by the prevailing macroeconomic factors led by soaring inflation and rising interest rates.
In recent weeks, the flagship cryptocurrency has mainly traded around the $20,000 range. However, a positive US jobs report saw the crypto rally pass $21,000 to trade at $21,214 by press time.
Altcoin dominates with positive returns
In general, many altcoins have recently experienced a bounce of relief as Bitcoin dominance remains below 40%. For example data of Blockchain Center indicates that altcoins dominate the top 50 assets.
In this case, the top 14 assets with positive performance are occupied by altcoins, while Bitcoin is in 20th place with -8.5% return in the last 90 days.
Overall, altcoins have gained increased attention thanks to key triggers in return, attracting buying pressure as Bitcoin bulls appear to have a technical advantage over bears. In particular, the market has witnessed several breakout coins, although there is widespread pressure as investors remain cautious.
Amidst the outbreak, meme cryptocurrencies are taking center stage. In the last 90 days in particular, Dogecoin (DOGE) has recorded a return of 81.7%, mainly inspired by the acquisition of Twitter Twitter (NYSE: TWTR ) by Elon Musk. Elsewhere, as reported by Finbold, on October 30, DOGE rose over 115% in a week. The returns have also been replicated in the Shiba Inu (SHIB).
Similarly, Ripple Labs’ native token, XRP, has been on the rise, driven mainly by a positive outlook in the case with the Securities Exchange Commission (SEC).
The prevailing market conditions will be decisive for a possible altcoin season to emerge, as it will affect investor interest. At the same time, the crypto market is looking for a possible price bottom that is likely to trigger a possible bull run. For example, with the economy threatened by a possible recession, risky assets could potentially benefit in the event the Federal Reserve cools its tightening policy.
Investors will also hope that the general market builds on the “Uptober” momentum to realize new gains towards the end of the year.
Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.
