Bitcoin Dominance Reaches New Heights, Sparking Speculation on Altcoin Season
Bitcoin’s dominance in the cryptocurrency market has surged to levels not witnessed since the last major bull run, igniting conversations about a possible altcoin season. Currently, Bitcoin’s dominance has climbed to an impressive 64.94%, marking a new four-year peak as of May 2. This increase, the highest observed since January 2021, is attributed to Bitcoin’s robust recent performance in the market.
Bitcoin Dominance Increased by 13% Since December 2024
Since April 21, Bitcoin’s value has skyrocketed from $85,197 to a record high of $97,470 on May 1, consistently holding above the $97,000 mark as of the latest updates. This significant price rally, coupled with a relatively subdued performance from altcoins, has contributed to the rise in Bitcoin’s dominance. This trend is part of a broader upward movement that has been ongoing since December 2024, where the dominance rate increased from 57.22%, reflecting a gain of over 13% in just five months. However, this ascent has pushed Bitcoin’s dominance into a historically critical resistance zone near the 65% threshold.
Historically, such levels have led to notable reversals; during the previous bull market in early January 2021, Bitcoin dominance reached a near four-year high of 73.63% before experiencing a swift decline, ending January at 63.09%. A brief rebound occurred in February 2021, hitting 64.83%, but the resistance proved resilient, resulting in a drop to 39.56% by September 2021. This decline lasted over seven months and coincided with a period where altcoins experienced significant growth, marking the onset of what is commonly referred to as the altcoin season.
Implications of the Recent Bitcoin Dominance Peak for Alt Season
Bitcoin’s dominance is once again testing this critical resistance level. The monthly Relative Strength Index (RSI) for Bitcoin dominance has soared to an unprecedented high of 72.22, indicating that the asset may be in overbought territory. Such conditions have historically been precursors to market corrections.
Should Bitcoin’s dominance fail to surpass this resistance, a pullback could follow. Initial support is identified at the 0.786 Fibonacci retracement level at 59.35%, with additional support at 54.97%. If these levels are breached, dominance may decline towards the 48.81% area, corresponding with the 0.382 Fibonacci level. A significant pullback in dominance could create conditions conducive to the long-anticipated altcoin season, where altcoins typically outperform Bitcoin.
Analysts Predict an Imminent Altcoin Season
Several analysts are weighing in on the potential shift for altcoins. Michaël van de Poppe, founder of MN Consultancy, has been particularly outspoken regarding the resilience and future prospects of the altcoin market. On April 16, he noted that the altcoin season index had dipped to its lowest level in two years, which coincided with a noticeable decline in the fear and greed index. He interpreted this pessimistic market sentiment as a contrarian signal, suggesting a potential turning point for recovery.
Three days prior to his remarks, van de Poppe pointed out that the total market capitalization of altcoins appeared to be stable and had recently undergone a successful retest, indicating a solid foundation for a trajectory towards new all-time highs. Meanwhile, pseudonymous trader Ak47 highlighted the prospect that the anticipated approval of altcoin-based ETFs in 2025 could significantly influence the altcoin market. According to estimates from Bloomberg Intelligence, Litecoin and Solana have a 90% likelihood of receiving ETF approvals, while XRP stands at 85%.
The ETF approval odds for 2025 were recently outlined by Bloomberg Intelligence, forecasting a 90% chance for Litecoin and Solana, an 85% probability for XRP, and an 80% probability for Dogecoin and Hedera Hashgraph. Additionally, Polkadot, Cardano, and Avalanche are projected at a 75% likelihood. Should these ETF products gain approval, expectations for a dynamic altcoin season could materialize. Furthermore, analyst Crypto Tamil discussed the BTC dominance chart, observing a bearish divergence on the daily Bitcoin dominance chart, and argued that the conditions are ripe for a robust altcoin season.
Disclaimer
This content is for informational purposes only and should not be construed as financial advice. The perspectives shared in this article may reflect personal opinions and do not represent the views of The Crypto Basic. Readers are encouraged to conduct their own thorough research before making investment decisions. The Crypto Basic assumes no responsibility for any financial losses incurred.
