Bitcoin dominance approaches a key historic resistance level, igniting hope that an epic BTC to altcoin capitulation will soon be underway into the next altcoin season. The weekly candlestick chart shows how much of a turning point this is. It’s a sign that a turning point in market dynamics could be close at hand.
The current market conditions are a whole new world compared to the bullish runs of 2017 and 2021. The introduction of Spot Bitcoin ETFs absorbs a lot of long-term liquidity, which by default factors the flow magnitude towards altcoins. The market is full of altcoins now, which is very different than just a few hundred that we saw in past cycles.
Institutional Bitcoin Adoption and Liquidity
The burgeoning institutional adoption of Bitcoin – largely enabled by Spot ETFs – has dramatically flipped the script on liquidity distribution. These ETFs essentially lock up a significant portion of all Bitcoin, redirecting how capital flows into the wider cryptocurrency market.
This is a contrast to previous cycles where liquidity was more easily spread across different altcoins. A drop in Bitcoin dominance does not guarantee huge altcoin climbs as seen in prior years. That shift may be due largely to the constrained flow in the market.
Technical Analysis Points to Potential Shift
According to a new technical analysis on TradingView, that’s not the only bad sign. It wouldn’t be shocking if Bitcoin’s market share were to fall to 40% in the coming months. This drop has the potential to ignite a new altcoin season. Doing so would surely raise eyebrows, indicating a far-reaching change in both market sentiment and investment priorities.
If the past is any indicator, it might be—if we do see severe altcoin strength, Bitcoin dominance may end up kissing 40% or 34.9% (in the more bearish case). This would indicate that altcoins are performing better than Bitcoin, raising more money and gaining a larger percentage of the market.
Established Cryptos Poised to Benefit
Though if Bitcoin dominance continues to decline, it will be well positioned to see the more established cryptocurrencies that have withstood the tests of time and several market cycles. Alts Ethereum, XRP, Cardano, Chainlink, BNB, and Litecoin have all the potential to recapture their luster to investors.
A decline in Bitcoin’s dominance could be a sign that we are in a new market cycle stage. In this period, more matured altcoins would likely gain new visibility and continued funding. As the altcoin market continues to fill, these cryptos can provide a safer and more trustworthy option.
