Bitcoin dominance weakens as Bitcoin holds at $63,000: Will altcoins rise?
Bitcoin dominance has weakened amid uncertainty, yet select altcoins are thriving, indicating an emerging altcoin season.
As altcoin performance increases, Bitcoin dominance weakens.
- If this trend continues, a potential price correction may be on the horizon.
Bitcoin bears neutralized another breakout attempt, maintaining pressure as bulls held above $62,000. With a price of $63,390 at press time, a return towards $70,000 may not be imminent.
While some analysts predict a rebound, others suggest that Bitcoin’s dominance may be increasing, hinting at a possible decline. Could this pave the way for an altcoin season?
Bitcoin dominance may be at risk
Historically, Bitcoin’s dominance has played a crucial role in predicting market growth, reflecting Bitcoin’s significant share in the cryptocurrency market.
Typically, when Bitcoin approaches a key resistance level, a corresponding peak in its dominance is often observed.
However, the chart below showed a divergence during BTC’s ATH of $73,000 in March. Despite the price increase, Bitcoin’s dominance remained stable, indicating a disconnect between price action and market dominance.
According to AMBCrypto, this points to increasing interest in altcoins, as investors see them as lower-risk alternatives to Bitcoin amid its rising value.
Notably, Ethereum’s recent price action supports this hypothesis, as it has outperformed Bitcoin over the past week, surging over 15% to reach $2,656 at press time.
In summary, should altcoin investors monitor Bitcoin’s critical resistance level for a potential rise? This could be key in predicting the next market movements.
Diverse signals indicate potential market leaders
Based on this data, 15 altcoins have outperformed Bitcoin over the past 90 days, with TAO leading the group, achieving a remarkable 80% profit compared to Bitcoin.
While this figure is half of what is needed for an altcoin season, the significant difference certainly challenges Bitcoin’s dominance.
Furthermore, TAO recorded a stunning 18% increase in the past 24 hours, much higher than Bitcoin’s 2%, reinforcing AMBCrypto’s previous hypothesis.
It is worth noting that TAO’s surge coincided with Bitcoin surpassing the key $63,000 range.
Currently, TAO’s outflow surge has reached a two-month high of $3 million, indicating that investors are shifting towards altcoins as BTC prices rise, demonstrating a direct correlation between the two.
Simply put, this correlation indicates a potential market high, as many investors lose faith in the trend reversal and shift their capital towards lower-risk alternatives.
If this trend continues, a price adjustment to $68,000—the next resistance—could occur, especially as Bitcoin’s dominance weakens with the influx of more altcoins into the top 50, setting the stage for a potential altcoin season—what are the chances?
The market is at a critical juncture
Interestingly, on the day Bitcoin tested the $63,000 range again, a significant portion of investors were in profit, as indicated by the close approach of 14 green caps.
However, as the bulls failed to create a breakout and the bears reestablished dominance, a substantial portion of stakeholders found themselves at a loss.
If these investors lose confidence in the price correction, it could lead to a panic sell-off, weakening Bitcoin’s dominance.
Additionally, this may shift asset allocation towards altcoins, which investors might view as a safer option.
In summary, the market is at a critical juncture. If Bitcoin’s dominance is maintained and the bulls support a breakout, the altcoin season could falter unless Bitcoin reaches its next resistance at $68,000.
However, if the bulls fail to hold the $64,000 range and a drop below $60,000 occurs—which seems likely—many altcoins may experience a temporary rise.
Nonetheless, for a sustainable altcoin season, confidence in future gains is essential, which is directly or indirectly tied to Bitcoin’s dominance. Therefore, monitoring this is crucial.
