Every now and then, we are met with a phenomenon in the cryptocurrency market where one asset surges while others follow suit, and then there comes a time when digital currencies can be bought for cheap. No matter how volatile, the crypto community always holds hope for a wide variety of currencies. Suddenly Bitcoin, which is the oldest digital currency, is resurging and pulling the rest of the options under its dominance. There seems to be one concern being raised time and again as the alternative coins, simply termed “altcoins, stand in the crypto platform: Have we seen the last of altcoin seasons?” The question lingers while Bitcoin’s dominance also overshadows the crypto sphere.
Bitcoin’s Grip Tightens: Dominance at a New High
The cryptocurrency market has often been cryptic, and some innovation keeps coming up. One would be surprised to note that the Bitcoin market and dominance have been on a steady rise since the low 40 percent mark observed in November 2022. The data further paints a clear picture. The last observed dominance for the metric of Bitcoin’s share in the overall market capitalization was above the 64 percent milestone in April. What this means is that almost two-thirds of the capital spent on digital currencies is now focused on Bitcoin, once again following the other myriad of assets available.
A Look Back: The Evolving Market Share of Bitcoin
The past provides valuable lessons, which allow understanding of every bit of market dynamics. In the initial phases, Bitcoin captured the whole market. However, in 2017, the rise of Ethereum-based tokens and a surge in ICO activities changed everything. By 2018, Bitcoin’s market share was less than 40%. After that, the years were tumultuous with changing Bitcoin’s dominance. The first half of 2021 saw another enormous change as the expanding DeFi market further contributed to the fall in Bitcoin dominance, which settled at around 40%. This trend was running along with the growth of NFTs, which were mainly built on Ethereum and the BNB Chain.
A Trader’s Compass: Interpreting Market Sentiment
Bitcoin dominance charts, while highlighting current market conditions, have also become pivotal for traders and investors. Historically, a declining dominance has been viewed as a bullish sign for the broader crypto market, as it indicates that a “crypto rally” would take place where investors heavily invested in multiple altcoins. Conversely, high Bitcoin dominance typically indicates a bear market during which investors favored the “safety” of Bitcoin as a store of value over the riskier altcoin market. P Perhaps some experts might argue that this cycle is breaking the mold.
“Bitcoin, Not Crypto”: Emerging Investment Strategy?
The phrase “Bitcoin, not crypto” effectively condenses a sentiment that is growing yet reserved towards Bitcoin maximalists. This represents a possible change in the pattern of crypto investment. “Bitcoin and altcoins are like a ‘washing machine’ in which value is transferred back and forth,” explains Scott Melker, host of the podcast ‘Wolf of All Streets.’” However, a shift in this cycle might be taking place, according to Nassar Achkar, CSO of CoinW. In an interview, Achkar claimed that there appears to be a dominant trend where investors are purchasing Bitcoin and holding it for the long term, which helps to view it as a reserve currency, and have much less incentive to swap it for altcoins, especially now that governments and corporations are becoming large holders of Bitcoin.” This form of new fiat money flowing straight into Bitcoin and not flowing out to altcoins can help to explain Bitcoin’s growing dominance.
Capital Flow “Bleeding”: A Change in Altcoin Investment Approach
Melker draws on an increasingly negative outlook on altcoins, arguing they “are bleeding against BTC because holders are selling to pay bills, not to rotate into Bitcoin. This illustrates a dwindling confidence within altcoins, where investors have lower conviction for a volatile environment, shifting to Bitcoin’s relative safety.”
The Altcoin Question Mark: Will the Season Ever Arrive?
Excluding stablecoins, Benjamin Cowen, CEO of The Cryptoverse, says Bitcoin’s dominance resting at 69% is important. He forecasts Bitcoin altcoin trading pairs may sustain further capitulation before any potential recovery and subsequent growth. While some market participants continue to cling to the notion that “altcoin season” is on the horizon—a period marked by widespread gains across altcoins—a collection of data and analyses suggests far more nuanced and dire underlying market conditions in the current cycle. The reignition of interest could stem from the advent of new technologies and their oversaturation to the masses, but present circumstances quash altcoins’ reign with the rise of Bitcoin.
Historical Echoes: A Glimmer of Hope for Altcoins?
It is noteworthy to mention that Bitcoin’s dominance saw other similar increases in the past, during 2018 and the first half of 2019. Those periods were eventually followed, too, by renewed interest in altcoins—will they be repeating the same cycle this time? This remains a key question for investors to tackle while navigating the ongoing complexities of the cryptocurrency market.
