BTC market share approaches 60%! Will the altcoin season come again? 5 key points to analyze the market situation

Introduction: Why Bitcoin's Dominance is More Important than Ever

Today, we will follow a key but often overlooked indicator in the encryption world: BTC dominance. This index is commonly referred to as BTC.D, which assesses the market share of BTC in the entire encryption currency market. For anyone tracking the next Bull Market, BTC dominance can provide valuable market insights and potential emotional clues about asset allocation within the encryption ecosystem.

At ChartScope, we have carefully analyzed this indicator, especially the evolving role of BTC in the current economic uncertainty. The rise of BTC's dominance is not just a technical signal - it reflects investors' increasing preference for stability, security, and Liquidity. Understanding this trend is crucial for BTC holders and enthusiasts, as it shapes a broader market landscape and reveals where funds may flow at critical market moments.

Let's explore the information about the future of the encryption market that BTC dominance conveys to us, the historical trends that have led us to this point, and why this indicator may become a decisive factor as we approach the next potential Bull Market.

The evolution of market cycles and Bitcoin dominance

The dominant position of BTC is not just a chart, but reflects the change of investor psychology over time. Examining past market cycles helps us understand why BTC's market share has skyrocketed or declined at different times, and what these changes mean for altcoins.

The first significant bull run in 2017 was mainly driven by the ICO frenzy, with startups raising funds by issuing tokens on the Ether blockchain. The explosive growth of ICOs led to a brief 'altcoin season,' during which Ether and other assets saw unprecedented gains. However, this surge was unsustainable, with many projects collapsing or underperforming, causing investors to return to relatively safer Bitcoin.

The next cycle, starting around 2018, introduced utility-focused projects. Tokens like Chainlink ($LINK) and Aave ($AAVE) have gained follow for their ability to meet specific needs in DeFi (Decentralized Finance) and infrastructure.

Blockchains like Solana, Polkadot, and Avalanche have also contributed to this growth, adding new infrastructure to the encryption industry. While some projects have achieved success, many altcoins have struggled to maintain momentum, and Bitcoin's dominant position has risen again, indicating that it remains the preferred asset when the speculative frenzy subsides.

Currently, we are in what can be called the third major cycle, although this phase feels different. Speculative frenzy has decreased, replaced by a more cautious optimism. Discussions about Real World Assets (RWA) and high-performance layer one blockchains have emerged, but explosive growth seen in previous cycles has not appeared. This shift reflects the evolution of the market, with investors placing more emphasis on validated technology and sustainable value – factors that make BTC a more stable choice.

In each cycle, the dominance of Bitcoin has always been an indicator of investor confidence, especially in a bear market. As we enter this new phase, the rise in dominance may indicate Bitcoin once again becoming a 'safe haven' asset in uncertain environments, which could have a significant impact on the flow of funds in the next Bull Market.

BTC Dominant Technical Analysis: Key levels worth following

Observing the BTC.D chart provides key data analysis for investors who rely on Technical Analysis to make informed decisions. Since the beginning of 2021, the dominance of BTC has been steadily rising within a clear rising channel, characterized by higher lows and higher highs. This trend indicates that investors' preference for BTC is continuously strengthening, and market sentiment may be shifting from altcoins to BTC.

The chart highlights the key support level around 55%, where buyers continue to intervene to maintain BTC's market dominance. On the other hand, the range of 60-63% shows a clear resistance, with the 61.8% Fibonacci retracement level as a particularly strong barrier. Historically, the 61.8% level has significant significance as it often represents a key reversal in many markets. If BTC's dominance approaches and breaks through this resistance, it may enter a more prominent phase, consolidating BTC's position as the dominant encryption asset.

Further support for the bullish view is the trading of BTC dominance above key MA, which may represent the 50-day, 100-day, and 200-day moving averages. When an asset remains above these moving averages, it usually indicates sustained momentum and a strong potential trend. The current arrangement of these MAs further strengthens BTC's strong position and suggests that the market may continue to lean towards BTC rather than altcoins in the mid-term.

If BTC.D breaks through the 60% threshold, we may see continued growth dominated by BTC, absorbing capital that would otherwise be dispersed into altcoins. Conversely, if it is rejected at this level, we may see a temporary pullback, providing a brief opportunity for altcoins to recover. This level is a critical turning point that every market participant should closely follow, especially as we prepare for a potential upcoming bull market.

Image source: Unsplash photo taken by Pierre Borthiry - Peiobty on Unsplash

The altcoin market pattern in the BTC-dominated market

With the rise of Bitcoin's dominance, the outlook for altcoins seems even more challenging. In previous cycles, a strong altcoin rebound typically coincided with a decline in BTC market dominance, as speculative interest shifted to smaller assets. However, this time, Bitcoin's dominant position implies a different story—amidst the fluctuation, BTC is increasingly seen as a stable anchor.

Some industries in the altcoin industry, such as Decentralized Finance (DeFi) and GameFi, face challenges in delivering on their promises. Especially for GameFi, it is expected to gain follow by the end of 2024, but investors' enthusiasm has decreased due to the lack of completed projects and ongoing delays. Although some promising developments are on the horizon, these projects are still far from mainstream adoption, highlighting the inherent risks of investing in altcoins. 01928374656574839201

In addition, speculative assets like meme Token continue to drain Liquidity from stronger projects, distorting market behavior. Although meme Tokens can generate short-term excitement, they often lack substantial use cases, raising concerns about their long-term impact on the crypto ecosystem. Our analysis indicates that while isolated opportunities may exist, in an environment focused on BTC, these opportunities are becoming increasingly difficult to identify.

For investors, this BTC-dominant rise requires a strategic approach to altcoins. Selective, data-driven investments in altcoin projects with good fundamentals may still yield returns. However, the era of indiscriminate profits seems to be fading, and the next bull run is likely to be dominated by BTC instead of a widespread surge in altcoins.

Scenario prediction: The meaning of BTC's dominant position for the next year

Looking ahead, there are two main scenarios related to BTC's dominant position. In the first scenario, if BTC.D breaks through the key 60% resistance level, BTC may consolidate its position as the market leader, with dominance levels potentially reaching 63-65%, a level unseen since 2020. Such a breakthrough could lead to a rebound in the BTC-dominated market, attracting more funds into BTC and sacrificing altcoins. This scenario could make BTC the preferred asset in the next bull run, further solidifying its position as the "digital gold" of encryption.

In the second scenario, if BTC's dominance encounters strong resistance at the 60% level, we may see a consolidation phase or a slight decline, providing an opportunity for AltCoins to gain some market share. This may benefit industry-specific AltCoins with strong narratives or technological advancements, such as certain Decentralized Finance (DeFi), infrastructure, or GameFi Tokens. However, considering the market sentiment shifting towards BTC as a safer asset during uncertain periods, this rebound may be temporary.

In the coming year, the dominance of BTC is expected to remain in the range of 55-65%, and the potential breakthrough provides investors with a clear signal. Regardless of the short-term results, BTC's role as the main asset in the encryption industry is becoming more consolidated, especially against the backdrop of increased regulatory transparency and market maturity.

Source: TradingView ChartScope's trading view

Conclusion: Key Points for the Next Bull Market

In short, BTC's dominant position as an important indicator of market dynamics provides us with insights into capital flows in the coming months. As we approach the next potential bull run, BTC's strong position indicates that it may lead this wave, especially if it breaks the 60% dominance level. This shift reflects the evolution of investor sentiment towards stability and security, highlighting BTC's attractiveness as the most mature asset in the encryption industry.

For Altcoin investors, this environment requires a more cautious and selective approach. While there may be opportunities in industries such as Decentralized Finance (DeFi) and infrastructure, the widespread Altcoin rebound may be limited due to BTC's continued attraction of attention. Understanding the BTC.D chart and its key resistance levels is crucial for making wise, data-driven decisions.

As always, ChartScope will continue to provide insights and technical analysis on cryptocurrencies, helping readers navigate the complexity of the crypto market. By closely following BTC's dominant position, investors can prepare for the upcoming bull run - a period that is likely to be defined by BTC's dominant role.

Disclaimer: This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances, and comply with relevant laws and regulations in their country and region.

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Original Author: ChartScope