As a seasoned analyst with years of experience in the volatile and ever-evolving world of cryptocurrencies, I have learned to never take market trends at face value. The recent surge in Bitcoin’s price might seem like the dawn of a new bull run, but I remain cautiously optimistic.
Recently, Bitcoin (BTC) has experienced substantial growth, yet this increase doesn’t necessarily indicate an imminent extended bull market.
According to Woominkyu’s analysis of on-chain patterns for CryptoQuant’s Quicktake, it has been observed that past bull markets commenced when Bitcoin experienced a decrease in its market share dominance. Regrettably, the current situation shows an increase in Bitcoin’s market share dominance, which contrasts with the pattern typically seen at the start of a bull market.
Diversifying Investor Capital
As suggested by Woominkyu, a decrease in Bitcoin’s market influence indicates that investors are spreading their investments across various alternative coins (altcoins) instead of solely focusing on Bitcoin. Essentially, it seems that the market needs to go through an altcoin boom before Bitcoin can have another significant price increase.
If investors shift their money from Bitcoin (BTC) towards other cryptocurrencies known as altcoins, it might lead to a significant surge across the entire market, potentially sparking a bull run. As Woominkyu mentioned, a decrease in Bitcoin’s dominance could signal the start of a new bull run for BTC itself.
The analyst pointed out, while examining the graph, that traditionally, significant upward trends in the broader market have occurred alongside drops in Bitcoin’s influence. If this trend continues, it could signal the start of a fresh wave of cryptocurrency growth as Bitcoin’s dominance wanes, they suggested.
Bitcoin Dominance Is Increasing
Over the last seven days, Bitcoin’s influence within the cryptocurrency market has been growing. As per the data available from CoinGecko, by October 24th, Bitcoin represented approximately 54.7% of the entire market cap. But as we speak on November 1st, this percentage has climbed to 58.2%.
Previously, Bitcoin’s influence reached a similar level only on August 5, just prior to the yen-dollar crisis that led to significant losses in the crypto market. However, a more prolonged increase in Bitcoin’s dominance occurred during March 2021, during the last major bull run. The asset’s share of the market stayed above 60% for approximately six months before this period.
According to Woominkyu’s assessment, for BTC to have another bull market, its dominance might first have to decrease. But since there’s a significant amount of capital flowing into the Bitcoin network right now, such a change could take some time.
Launching Bitcoin exchange-traded funds (ETFs) in the United States and other regions opened a path for conventional financial investors and organizations to tap into the world’s most significant blockchain network, Bitcoin. Since October, these ETFs, particularly those in the U.S., have experienced substantial investment inflows. This consistent capital injection has also caused Bitcoin’s price to surge above $73,000 for the first time since March.
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2024-11-01 22:56