Here’s Why Bitcoin Dominance is Less Likely to Decline Soon And What It Means for Altcoins

As a seasoned analyst with over two decades of experience in financial markets, I have witnessed numerous bull and bear cycles, and the current state of Bitcoin and altcoins is no exception. While it’s always tempting to jump on the bandwagon of altseason predictions, I remain skeptical due to my deep understanding of market dynamics.

Despite bitcoin’s price turmoil over the past week, Ki Young Ju, the founder and CEO of the market analytics platform CryptoQuant, believes the leading digital asset’s dominance is less likely to decline soon.

The trend in historical data indicates that less traditional forms of cryptocurrency, often referred to as “altcoins,” tend to gain momentum when Bitcoin experiences a pullback. During periods of rising markets (bull cycles), the dominance of Bitcoin in the market tends to decrease.

Ju’s research suggests that the period when funds move from Bitcoin to alternative cryptocurrencies (altseason) might not occur as soon as financial analysts have anticipated.

Bitcoin Dominance Less Likely to Fall

Ju posits that Bitcoin’s rapid expansion within this cycle decreases the likelihood of its influence significantly diminishing. This year, its growth can be attributed to various factors such as the debut of spot exchange-traded funds (ETFs) in the U.S., and President Donald Trump expressing favorable sentiments towards cryptocurrency during his election campaign.

According to data from CoinmarketCap, at the time of this report, Bitcoin’s market influence stood at approximately 57%. There has been a minor decrease in its dominance over the past week and month.

As an analyst, I’ve observed a significant trend in the crypto market over the past few months: Bitcoin’s impressive 37% market cap growth has been followed by a 16% rise in large-cap altcoins. On the other hand, cryptocurrencies with smaller and mid-sized market caps have seen a more modest 10% increase. The only exception to this pattern was during the memecoin season in April, where small and mid-sized coins outperformed Bitcoin. Since then, Bitcoin has maintained its leading position.

Although Bitcoin (BTC) seems to be experiencing a pullback as investors cash out after the coin’s recent surge, Ju suggests that the type of investment pouring into the Bitcoin network could prolong its dominance and postpone altcoin season for a while. This Bitcoin bull market is primarily fueled by demand from spot ETFs and institutional investors, suggesting a change in capital movements.

What is the Fate of Altcoins?

Apart from Ethereum, which holds a share of 12.8%, the rest of the cryptocurrency market, comprising stablecoins and memecoins, takes up about 30.2%.

2021’s bullish phase saw Bitcoin’s influence drop to 40%, while altcoins accounted for 41% of the overall cryptocurrency market during the altcoin surge, indicating that there is potential for further growth among these alternative coins before they experience another significant rise.

To see a surge in altcoin market caps that would ignite an “altseason,” there needs to be a substantial increase of new funds flowing into cryptocurrency exchanges. However, it seems institutional investors and ETF buyers are not considering shifting their investments from Bitcoin to altcoins at this time. Therefore, to initiate the next altseason, altcoins may need to keep depending on individual crypto exchange users or devise innovative strategies to draw in fresh capital independently.

2024-11-29 23:24

Here’s Why Bitcoin Dominance is Less Likely to Decline Soon And What It Means for Altcoins

Bitcoin Dominance Less Likely to Fall

What is the Fate of Altcoins?

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