Bitcoin’s dominance over the broader crypto market has become a key area used by traders trying to determine when the altcoin season will finally be. At the moment, Bitcoin still controls close to 60% of the total market, and this is still up to date keep any meaningful altcoin exits at bay.
However, according to a Bitcoin analyst, history suggests that if this balance begins to change, the change in altcoin time it usually happens quickly, usually playing out over a period of two to two months.
Why Bitcoin Dominance Matters in the Altcoin Season
In his analysis, explained the analyst that the dominance of Bitcoin, also known as BTC.D, is an important factor in determining when the capital starts to turn into altcoins. BTC dominance measures Bitcoin’s share of the total crypto market capitalization, and declines in this metric have historically coincided with explosive altcoin rallies. At the time of writing, CoinMarketCap puts Bitcoin’s dominance at 59%.
Looking back at 2017, the BTC.D chart shows Bitcoin’s dominance dropping rapidly from around 96% in early March to around 60% in mid-May. That drop was a play on one of the most brutal altcoin rallies the market has ever seen.
The same pattern played out in 2021, when BTC dominance dropped from around 60% in early April to around 40% in mid-May. That move coincided with another strong altcoin expansion, pushing Ethereum and several other major altcoins to new all-time highs. Many of those peaks, especially among meme coins like Dogecoin and Shiba Inu, they have not stopped until today.
The most important takeaway from both cycles, according to the analyst, is the speed of travel. All in all, it took one to two months for a full-fledged altcoin season to happen when Bitcoin’s dominance began to roll in full force.
BTC’s Next Move can decide everything
The analyst notes that many investors underestimate how quickly this change can happen. After waiting for years of accumulation and consolidation, market participants often lose patience just before the final stage. Historically, however, the altcoin season tends to play out as soon as the conditions coincidenot a little over many months. Therefore, investors who are waiting for the altcoin season can still hold on to that trend and not lose focus.
He also pointed to major signals that support a vulnerable environment, pointing to strength in assets such as small caps, gold, and silver hitting higher. These the conditions are consecutive more money flowing into high beta assets once confidence is restored.
Anyway, altcoins it cannot support a true explosion without BTC first making a convincing move. If Bitcoin fails to push to new highs, altcoins may see short-term relief rallies. On the other hand, the all-time new Bitcoin could act as the deciding factor that drives retail traders back into the market and ultimately leads to FOMO and an altcoin exit season.
Featured image from Getty Images, chart from Tradingview.com
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