Key Points
- Bitcoin’s dominance in the market is being challenged as altcoins emerge as distinct asset classes.
- Historical patterns suggest a potential altcoin rally following Bitcoin’s consolidation below $90K.
Bitcoin’s Dominance and the Emergence of Altcoins
Bitcoin’s dominance is considered a critical factor in determining the future trajectory of altcoins. Presently, Bitcoin and altcoins are developing as two separate asset classes. Analysts have noted that the current market cycle differs from previous ones, with a shift from speculative trading to a more sustained, fundamental-driven rally. This optimism is driven by the belief that Bitcoin’s next phase could lead to a bull run reaching $100K.
In less than a week, Bitcoin surged to a new all-time high of $93K, with its market dominance reaching around 70%. This surge was influenced by several factors, including post-election liquidity, FOMC rate cuts, and the post-halving impact. However, speculative pressure has emerged, preventing Bitcoin from reaching its target, as it has now consolidated below $90K for two consecutive days.
Altcoins Poised to Break Resistance
Historical patterns observed in previous market cycles suggest a 230-day pattern following Bitcoin halvings. After the initial post-halving bull run, which often pushes Bitcoin dominance to new highs, market participants look to altcoins for additional profit opportunities. In 2020, the supply shock caused by the post-halving event materialized within the first 150 days, with Bitcoin reaching $40K for the first time.
However, after Bitcoin’s momentum slowed, altcoins began to outperform, with many posting substantial gains about 60 days later. Similarly, the April halving this year triggered an economic imbalance, causing a sharp increase in demand while the reduced supply led to tighter market conditions. This environment has created the ideal conditions for pushing Bitcoin dominance near 70%, further fueling its rise to a new all-time high.
Bitcoin’s consolidation below $90K reflects a growing ‘risk-averse’ sentiment in the market. Despite bulls countering bearish pressure, the failure to trigger a parabolic run raises concerns. The market’s hesitation to break key resistance levels suggests that Bitcoin’s dominance may be stalling, creating an ideal environment for investors to diversify into high-cap tokens.
In the last 24 hours, as Bitcoin posted an approximately 4% decline, dropping to $86K, major altcoins reaped the benefits, with XRP alone gaining over 15%. Therefore, unless Bitcoin dominance rebounds, supported by both institutional and retail backing to solidify BTC’s long-term prospects, altcoins may continue to dominate the gainer charts.
On the monthly RSI, Bitcoin dominance has entered overbought territory, signaling a potential correction. This could indicate that the dominance of Bitcoin may soon experience a pullback, possibly paving the way for altcoins to gain traction. Meanwhile, institutional support for Bitcoin is weakening, as major players exit the cycle after locking in massive gains from this bull run.
With historical patterns supporting this trend, altcoins look set to break key resistance levels in the coming days, potentially triggering an altcoin season by the end of Q1 next year.