Key Points
- Bitcoin’s dominance is a key indicator for future altcoin trajectories, with its recent surge to a new all-time high of $93K.
- Despite Bitcoin’s consolidation below $90K, historical patterns suggest a potential altcoin rally in the coming days.
Bitcoin’s dominance is a crucial metric for predicting the future trends of alternative cryptocurrencies, or altcoins. Recently, Bitcoin and altcoins have been emerging as two distinct asset classes.
Many industry analysts have observed that this market cycle differs from previous ones, as it has transitioned from speculative trading to a more sustained, fundamental-driven rally. This optimism stems from the belief that the next phase of Bitcoin could potentially lead to a bull run reaching $100K.
Factors Influencing Bitcoin’s Surge
Within a week, Bitcoin surged to a new all-time high of $93K, with its market dominance reaching approximately 70%. This was influenced by a variety of factors including post-election liquidity, Federal Open Market Committee (FOMC) rate cuts, and the impact of the post-halving event.
However, speculative pressure has appeared, preventing Bitcoin from reaching its target, as it has now consolidated below $90K for two consecutive days. This consolidation at this “high-risk” range could potentially signal a shift of capital from Bitcoin to other lower-risk assets.
Altcoins Poised for Breakout?
Historical patterns from previous market cycles suggest a 230-day pattern following Bitcoin halvings. After the initial post-halving bull run, which often drives Bitcoin dominance to new highs, market participants tend to look to altcoins for additional profit opportunities.
In 2020, the supply shock caused by the post-halving event materialized within the first 150 days, with Bitcoin reaching $40K for the first time. However, as Bitcoin’s momentum slowed, altcoins began to outperform, with many posting significant gains about 60 days later.
Similarly, this year’s April halving, which reduced the miner reward to 3.125 Bitcoins, triggered an economic imbalance. This caused a sharp increase in demand, while the reduced supply led to tighter market conditions.
The resulting lower liquidity, combined with Bitcoin’s controlled supply, has created the perfect setting for pushing Bitcoin dominance near 70%, further fueling its rise to a new all-time high.
If this trend repeats, many altcoins could be poised to break past major resistance levels before the end of Q4. With Cardano gaining significant traction, this further reinforces this theory.
Evidence Supporting the Theory
Bitcoin’s consolidation below $90K reflects a growing ‘risk-averse’ sentiment in the market. Despite bulls countering bearish pressure, the failure to trigger a parabolic run raises concerns.
In other words, the hesitation to break key resistance levels suggests that Bitcoin’s dominance may be stalling, creating an ideal environment for investors to diversify into high-cap tokens.
As a result, in the last 24 hours, as Bitcoin posted an approximately 4% decline, dropping to $86K, major altcoins reaped the benefits, with XRP alone gaining over 15%.
Therefore, unless Bitcoin dominance rebounds, supported by both institutional and retail backing to solidify BTC’s long-term prospects, altcoins may continue to dominate the gainer charts.
However, on the flip side, altcoins could experience short-term gains if Bitcoin dominance climbs back to near 70%. Yet, a full-fledged altcoin season might remain limited, raising the critical question: Will Bitcoin regain its weakening dominance?
On the monthly RSI, Bitcoin dominance has entered overbought territory, signaling a potential correction. This could indicate that the dominance of Bitcoin may soon experience a pullback, possibly paving the way for altcoins to gain traction.
Meanwhile, institutional support for Bitcoin is weakening, as major players exit the cycle after locking in massive gains from this bull run. For Bitcoin dominance to regain control, these players are likely waiting for a “dip,” where prices are more feasible for re-entry.
Until then, it presents a prime opportunity for bulls to capitalize on an altcoin rally. With historical patterns supporting this trend, altcoins look set to break key resistance levels in the coming days, potentially triggering an altcoin season by the end of Q1 next year.