As Bitcoin (BTC) approaches the significant milestone of $70,000, its influence within the broader cryptocurrency market has surged to a new cycle high of 58.9%. This development raises questions about the future of altcoins and their potential to thrive amidst Bitcoin’s growing dominance.
Understanding Bitcoin Dominance: Are Altcoins at Risk?
Bitcoin dominance (BTC.D) is a crucial metric that reflects the proportion of the entire cryptocurrency market cap that is held by Bitcoin. Recently, BTC.D has reached a new peak of 58.9%, a level last observed in April 2021. This rise in dominance has coincided with Bitcoin’s price surge, which saw a nearly 10% increase over the past week, bringing it to $67,769 at the time of this analysis.
The Broader Impact on the Crypto Market
Simultaneously, the overall cryptocurrency market capitalization has experienced a notable increase, rising from $2.26 trillion on October 8th to $2.41 trillion by October 16th, according to data from CoinGecko. However, this surge is primarily driven by Bitcoin’s price appreciation, with altcoins struggling to keep pace.
At the beginning of October, Bitcoin dominance stood at 57.1%. Since then, it has climbed by approximately 1.8%, highlighting Bitcoin’s robust performance in comparison to other prominent altcoins like Ethereum (ETH), Solana (SOL), and Binance Coin (BNB).
Challenges to the Anticipated Altseason
The current level of BTC.D has cast doubt on the prospects for the much-anticipated “altseason,” a period typically marked by rapid price increases in altcoins and a decline in Bitcoin dominance. Historically, BTC.D reached a peak of 70% during the post-COVID bull market from 2020 to 2021 before declining to 40% by mid-2021.
In late 2022, BTC.D hit a low of around 39% following the FTX collapse due to fraud charges against its leadership. Since then, Bitcoin dominance has been on a steady upward trajectory.
The ETH/BTC Ratio: A Potential Indicator for Altseason
As Bitcoin dominance continues to rise, it’s important to analyze the ETH/BTC trading pair, often referred to as the ETH/BTC ratio. This ratio measures Ethereum’s (ETH) performance relative to Bitcoin.
The Current State of the ETH/BTC Ratio
Currently, the ETH/BTC trading pair stands at 0.0385, a level last seen in April 2021. Ethereum has struggled to establish a higher high against Bitcoin since at least November 2022, reflecting weak ETH price action over the past two years. A strong ETH performance against BTC often precedes an altseason, but at present, there are no clear signs of a meaningful trend reversal.
Decentralized Finance and the Altcoin Market
The total value locked (TVL) in decentralized finance (DeFi) protocols across various blockchains has also shown a decline, dropping from nearly $110 billion in June 2024 to $88 billion. This indicates a decrease in demand for altcoins among crypto investors. However, some crypto analysts and technical indicators suggest a potential altseason may still be on the horizon.
For instance, earlier this month, the altcoin market cap surpassed its 200-day exponential moving average (EMA), a key resistance level that signals strong altcoin performance in recent days. Additionally, Steno Research recently noted that Ethereum is poised for a comeback following anticipated interest rate cuts by the US Federal Reserve (Fed).
At present, Bitcoin trades at $67,769, marking a 2.5% increase over the past 24 hours.
