Bitcoin’s share of the overall cryptocurrency market rose sharply, reaching a significant four-year high of 64.94% on May 2. This revival has sparked rampant speculation about the potential arrival of an altcoin season. It takes a lot of us back to the market dynamics that we experienced during other bull run cycles. Market analysts are examining major indicators and past cycles. Their hope is to figure out if Bitcoin’s dominance is here to stay or how far-fetched the idea of dangerous altcoins taking off is.
Bitcoin’s dominance rocketed in December 2024. It leapfrogged from 57.22% to achieve more than 13% of growth in just five straight months — very impressive. With this year’s performance, Bitcoin dominance has landed itself in a historically important resistance zone just above the 65% level. In January 2021, Bitcoin dominance skyrocketed to an almost four-year excessive of 73.63%. It crashed, closing the month at 63.09%. Now, the market is waiting to see whether history will repeat itself.
Technical Indicators Suggest Overbought Conditions
In addition, Bitcoin dominance’s monthly Relative Strength Index (RSI) has spiked to an all-time high of 72.22, indicating overbought conditions. This technical indicator points to the conclusion that Bitcoin is overvalued in the short term. The latter circumstance is a recipe either for a hefty correction or long consolidation. Michaël van de Poppe noted a bearish divergence on the daily Bitcoin dominance chart. He argues that this metric is coming near its high water mark. He has been an outspoken critic of the paradigm shift altcoin market’s durability and future.
Most notably, Van de Poppe has been watching the altcoin market very closely. As recently as April 16, he declared that the altcoin season index level at two-year lows. In fact, he argued that the stage has been set for a true altcoin season. If Bitcoin dominance goes lower from this point, analysts believe it should be able to go down at least toward the 48.81% area. Providing resistance, this move would meet the 0.382 Fibonacci level.
If Bitcoin dominance continues to drop, it has a solid support under it at the 0.786 Fibonacci retracement level of 59.35%. The next significant support comes in just behind that at 54.97%. Despite the bullishness from BTC’s dominance, these levels can serve as important limbo areas where BTC dominance could consolidate before rolling over or bouncing up.
Historical Parallels and Altcoin Season Potential
During the last bull market in 2021, Bitcoin dominance hitting a similar level resulted in a quick reversal. At the end of February 2020, Bitcoin dominance made a brief return to 64.83%, but rejection was strong. As seen by September 2021, Bitcoin dominance ultimately cratered to 39.56%, right as altcoins took off to their significant price appreciation.
The recent run-up has pushed Bitcoin dominance to a historically important resistance area over the 65% level. Needless to say, the market is intently focused on whether this new support level holds. If it does not, the opposite trend could take place, possibly sending altcoin valuations much higher.
Surging recent price action from Bitcoin alone played a role in boosting the Bitcoin dominance. Bitcoin’s recent price increase has attracted unprecedented amounts of capital and public attention. As a direct consequence, it now represents a greater percentage of the total cryptocurrency market cap value.
Market Outlook and Future Expectations
The entire cryptocurrency market stands at an important crossroads. Firstly, Bitcoin’s dominance is approaching key resistance levels, and many technical indicators give the impression Bitcoin is overbought. In reality, historical patterns indicate that this kind of altcoin rotation is inevitable. This is similar to the dynamics we experienced throughout the 2021 bull market.
Investors and traders alike should keep a sharp eye on Bitcoin’s price action and dominance metrics. Monitoring altcoin performance with each altcoin’s performance they can make better decisions. The relationship between Bitcoin and altcoins will probably determine the direction the cryptocurrency industry takes over the next months.
