Aside from a few rare outliers, owning Bitcoin has been a better investment compared to other cryptocurrencies in recent years. Altcoins like Ethereum and others have only recently caught up, and BTC dominance has retained the lion’s share of the crypto market cap.
Dominance, however, has lost an important trendline that goes back four full years to the peak of the last bull market, and this could indicate that a major turnaround is imminent in the crypto market. Could this be the altcoin season crypto investors have been waiting for?
Bitcoin dominance loses crucial bear market trend line
At the height of the bitcoin fever in 2017, interest turned to altcoins, which were much cheaper per coin in comparison as investors looked for the next BTC.
Related reading | Five Signs That Said Altcoin Season Hasn’t Even Started Yet
These investors learned the hard way that there is no substitute for Bitcoin. Altcoins fell as much as 99% in most cases, while Bitcoin only wiped out 84% of its gains by comparison. Both scenarios are now far in the back view, and Bitcoin has had a dominant lead ever since.
BTC dominance has lost an important monthly trendline that goes all the way back to the top of the last bull market CRYPTOCAP-BTC.D on TradingView.com
At the height of this fever, dominance only reached 35% but has since stayed at or above 63%. That key level was lost at the same time there was a critical trend line, and now there couldn’t be any overperformance in Bitcoin for the next year or more.
The trendline in question goes back four years to the height of the bull market and has supported dominance since then.
Altcoins are ready to explode if the dominance drops further
Bitcoin dominance is key to unlocking the true potential of each altcoin season that has kept the leading cryptocurrency by market capitalization away for many years.
An enlarged view shows the number of times the BTC dominance attempted the line | regain CRYPTOCAP-BTC.D on TradingView.com
The loss of the previous long-term trendline resulted in a short-term consolidation followed by a sharp decline. A declining retest with a BTC dominance of 70% failed and caused the important crypto market metric to fall back to the second ascending trend line.
Related reading | The altcoin season is here: “Buy Crypto” outperforms Bitcoin searches on Google
Since the 63% level is now also being lost, the BTC dominance should move towards the middle of 50% so that Altcoins can rise over a longer period of time compared to Bitcoin.
Altcoins could theoretically hold up better even with a more extensive correction, but this scenario is unlikely as the riskier assets tend to be more volatile and more sensitive to larger sell-offs in the crypto market.
Featured image from deposit photos, charts from TradingView.com