October 28, 2024
Look to Bitcoin's Dominance Reversal to Reveal When Altseason Will Start
Dear Subscriber,
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| By Marija Matic |
Bitcoin (BTC, “A”) is once again ticking upward.
After a small correction last week, it crossed back above the $69,000 level earlier today.
But price action isn’t the only thing on the rise.
As BTC eyes $70,000 once again, its market dominance has climbed to 60% of the market share!
That means BTC makes up 60% of the total crypto market cap, with all other coins combined representing the remaining 40%.
Why is this important?
Because it helps paint a picture of whether Bitcoin is leading the market … or if an average altcoin could present a better opportunity for investors.
That’s why today, I want to talk about …
The Key Phases of Bitcoin Dominance
Initially, Bitcoin held over 94% market share due to a lack of competition in the cryptocurrency space.
But March 2017 marked the beginning of a significant decline in its dominance:
Two primary factors contributed to this shift:
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Ethereum's Surge: In March 2017, Ethereum (ETH, “A-”) traded at $17 per coin. Within four months, it skyrocketed to $400 before eventually hitting $1,450 by January of the following year.
This dramatic increase bolstered ETH’s market cap and dominance.
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The Emergence of Altcoins: That same year also marked the rise of alternative cryptocurrencies such as Cardano (ADA, “B+”), Eos (EOS, “D”), TRON (TRX , “C+”) and Neo (NEO, “C”). These new competitors further fragmented the market share.
As a result, substantial capital was redirected into these altcoins, creating what we know now as “altcoin season.” That’s when the altcoins’ combined market cap percentage is on the rise and overshadows Bitcoin’s growth.
By the peak of this altcoin season in January 2018, Bitcoin’s dominance plummeted to an all-time low of 35.37%.
In the years since, Bitcoin's dominance has been on a roller-coaster ride, with peaks and valleys that typically align with the bull and bear market cycles.
During the 2021 bull market, for example, altcoins outperformed, and Bitcoin saw its dominance slip to 40%.
But the 2018-2019 bear market saw the opposite trend. Bitcoin's resilience outshined altcoins. As such, its market dominance surged to a peak of around 73% in both 2019 and 2020.
This period marked a "double top" resistance level — a significant point of interest for traders.
And during the bear market of 2022, the average investor was better off holding Bitcoin as its dominance started climbing.
In short, it's generally beneficial to hold Bitcoin during bear markets and at the onset of bull markets.
Conversely, altcoins tend to outperform Bitcoin in the later stages of bull markets, creating new altcoin seasons.
So, let’s jump to today.
Zoom out on the Bitcoin dominance — or BTC.D — chart below, and you can see this almost uninterrupted rise of Bitcoin dominance since November 2022:
While a few altcoins have outperformed Bitcoin, this data suggests that investing in Bitcoin in 2022 would have yielded significantly better returns than in most altcoins until this point in the cycle.
Bitcoin's current dominance is a testament to its resilience and perceived value as a store of value. And its fundamental strength and institutional adoption continue to underpin its leading position.
Still, if we follow the historical pattern, we should see a reversal in market dominance in our near future.
And, as I said, when that happens, altcoins will generally outperform Bitcoin … presenting new opportunities for investors.
Now, many are wondering …
When Will the Reversal Occur?
Several factors come into play to determine when we can expect funds to rotate from the No. 1 crypto to altcoins.
But at the top of that list is Bitcoin’s all-time high.
We’re unlikely to see a significant reversal in market dominance until Bitcoin surpasses its all-time high and begins to rally toward new peaks.
And even then, some investors won’t be rotating parts of their gains until Bitcoin reaches a range of $90,000 to $100,000.
In this scenario, Bitcoin's dominance could potentially even continue growing to around 70%-73% before we see an altcoin season.
Additionally, we’ll need to see major altcoins — like Ethereum, BNB (BNB, “C+”) or Solana (SOL, “B+”) — initiate substantial rallies.
Currently, their performance is mixed. BNB and SOL have both demonstrated steady growth over the past year, with their dominance increasing to 3.80% and 3.60%, respectively.
In contrast, however, the much larger Ethereum has seen a decline in its dominance. It dropped from 17.4% to 13.29% during the same period.
For now, it looks like altcoin season is still a distant point on the horizon.
But don’t let that make you complacent. Now is the time to get ready.
Because once it hits, we likely won’t see another strong altcoin season until the next bull market.
To that end, my colleague, Juan Villaverde, is hosting an urgent briefing tomorrow, Tuesday Oct. 29 at 2 p.m. Eastern to help you prepare.
His proprietary Crypto Timing Model has been tracking the crypto market cycles for years. Now, it is signaling that a unique window of opportunity for investors to get in on top-performing cryptos is almost here.
It’s so impressive, Juan is calling it “Crypto’s Golden Window.”
The last time his Crypto Timing Model announced a Golden Window, select coins saw windfall gains of 19x … 23x … and even 93x.
In his briefing, Juan will break down …
- How his timing model works …
- What it signals for the coming months …
- And he’ll name the three coins he believes can outperform in the coming altcoin season.
It’s free to attend. All you need to do is save your seat, then tune in tomorrow at 2 p.m. Eastern.
Plus, to make extra sure you’re ready for altcoin season, I took a look at the current altcoin market … and noticed something interesting.
The only sector that has substantial inflows right now is the memecoin sector.
Throughout 2024, we’ve observed a consistent "memecoin season," with some of these coins significantly outperforming Bitcoin.
Related Story: Ride the Memecoin Madness into the Next Rally
To be clear, the rising market cap of memecoins hasn't yet challenged Bitcoin’s dominance.
But the fact that it is the only sector seeing notable inflows indicates to me that this altcoin season may look different.
Previously, altcoin season was a “rising tides lift all boats” affair. Bitcoin’s slipping dominance would generally be met with a simultaneous rally across all altcoins.
This cycle, I believe we may see different categories gain traction at varying times — either independently or in parallel with Bitcoin.
Of course, only time will tell how this bull market will continue to play out. Until then, I encourage you to keep up with us here at Weiss Crypto Daily for the latest crypto market updates.
Best,
Marija Matiฤ
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