Bitcoin dominance is in decline, falling to as low as 59.2% earlier on Sunday as the Bitcoin (BTC) price stalls below $100,000, but altcoin markets heat up.
Last around $97,800, Bitcoin bulls remain optimistic that the world’s largest crypto may be about to vault above $100,000.
The macro backdrop remains unbelievably strong for the world’s largest cryptocurrency by market capitalization.
President-elect Donald Trump’s incoming administration, and the incoming Republican-held Congress, are expected to herald in a new era of pro-crypto policy in the US, including the possibility of the establishment of a national Bitcoin reserve.
Institutions are racing to accumulate, as seen in the massive Bitcoin ETF inflows since the election.
And more companies may soon follow Microstrategy’s lead. The largest corporate holder of BTC’s executive chairman of Microsoft Michael Saylor gave a short presentation on the pros of adopting a Bitcoin treasury strategy to Microsoft’s board on Sunday.
Is Altcoin Season Officially On?
Whilst all of this is great for Bitcoin, it’s arguably even better for altcoin markets, hence the recent decline in Bitcoin dominance. Altcoin markets were suppressed by a strongly anti-crypto Biden administration and SEC over the past three years.
Crypto’s arch-enemy Gary Gensler will step down as SEC chair when Trump is inaugurated in January, and altcoin bulls are hoping this will herald the start of a new golden age for the US crypto industry.
Whilst it remains to early to definitively say altcoin season is here – at 57%, Bitcoin dominance has only so far dropped back to its summer 2024 levels and CoinMarketCap’s altcoin index was last at 74 (75 means altcoin season) – a new alt season seems all but inevitable.
XRP (XRP) has raced a staggering 322% higher in the past 30 days, adding a staggering more than $80 billion in value to cryptocurrency markets and taking the fourth largest crypto by market cap.
Solana (SOL) recently hit new record highs in the $260s, Cardano (ADA) is up over 200% in 30 days, and Ethereum (ETH) is eyeing a retest of $4,000.
But chart analysis suggests altcoin season could be about to accelerate, with Bitcoin dominance set to dive.
X user Mikybull Crypto pointed out a pattern that Bitcoin dominance tends to remain at elevated levels until roughly 240 days after each halving, only to then dive spectacularly over the course of the next 6 or so months.
A closer look at the Bitcoin dominance chart also suggests a rising risk that the recent drop could accelerate.
Bitcoin dominance has been trending higher within the confines of an upwards trend channel since mid-2023. But that trend channel is under threat of being broken imminently.
If this trend line does break, chart analysis suggests a drop back towards a Bitcoin dominance percentage of 50% is likely.
How Low Could Bitcoin Dominance Go?
Back in January 2018, Bitcoin dominance fell as low as 35% during the first altcoin season before then bottoming out around 39% in 2021 through to late 2022 following the second altcoin season.
One might assume then that altcoin season three might send Bitcoin dominance eventually as low as around 40%.
Readers should understand, this isn’t to suggest that Bitcoin will do badly, only that altcoins will do better.
And there are plenty of narratives to support the case for altcoin outperformance. In recent years, Bitcoin was insulated from SEC attacks and received Blackrock’s support, which culminated in the launch spot ETF launch in January.
The same cannot be said for most of the rest of the altcoin market – the last few years has seen the SEC embark on a legal rampage called “regulation by enforcement” against major US crypto firms, which also saw them label dozens of major cryptos as digital securities.
Admittedly, Ethereum was able to secure an ETF launch earlier this year, but initial enthusiasm was muted amid the ongoing altcoin market overhang.
However, the prospect of a 180-degree shift towards pro-crypto policy has up until recently beaten down coins like XRP and ADA charging higher.
All eyes are now on whether Ethereum can follow suit and break above its 2021 record highs about $1000 above current levels.
Risks seem strongly tilted in favor of an upside breakout of the largest altcoin by market cap, and a further rapid decline in Bitcoin dominance.
Smaller Coin to Consider As Altcoin Season Beacons
Major altcoins are set to pump hard in the coming months. But the coins that will perform best are likely to be new, still relatively unknown but massively high-potential projects.
There is a lot of chatter about micro-cap coins in the AI space, but traders shouldn’t overlook new meme coins.
One name that has been getting a lot of attention in web3 circles in recent weeks has been Pepe Unchained (PEPU).
Pepe Unchained, an innovative meme-themed Ethereum layer-2 protocol that is busily building one of the most promising ecosystems in the crypto space, has raised over $60 million from early backers in its presale.
Its huge presale success combined with rapid community growth sets up PEPU to potentially be the most explosive token launch of 2024.
cryptonews.com‘s in-house analyst Crypto Arjay outlines why the project has so much upside potential in the video below.
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