Bitcoin Dominance Drops: Is Altcoin Season Approaching?

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In the downtrend, many altcoins suffered a bloodbath and dropped almost 30% to 70% in price in recent months. This huge decline has many analysts doubting the altcoin season. However, recent developments in Bitcoin’s dominance provide a glimmer of hope for altcoins. 

Want to know when to dive into altcoin season? Step in. 

Understanding the Halving Dynamics

Meanwhile, Prominent crypto analyst Wise Advice provides an insightful analysis of how the Bitcoin halving cycle can predict the timing of the next altcoin season. The core idea is that after each Bitcoin halving, which happens roughly every four years, there is a significant opportunity for altcoins to surge. This pattern has been consistent throughout Bitcoin’s history.

However, analysts suggest that investors could see this as an opportunity to shift their focus towards altcoins, expecting a potential gain. Moreover, for the altcoin season, at least 75% of the top 50 altcoins must outperform Bitcoin.

Halving Impact on Altcoins

After each halving, it takes about 1 to 1.5 years for Bitcoin to reach a new all-time high (ATH), and this is the period for altcoins boom like Ethereum, Solana, and Polkadot. For example, following the third Bitcoin halving on November 9, 2021, Bitcoin achieved its ATH, and shortly after, Ethereum hit its ATH of $4,800 on November 10, 2021. Solana reached $250 just five days before this, whereas Polkadot peaked at $55 on November 4, 2021, and Avalanche hit $146 on November 21, 2021. 

Similarly, during the second halving bull cycle in December 2017, Ethereum surged to $1,400 in early January 2018. The first halving bull cycle in November 2013 saw Litecoin rise from $2 to $53.

How Money Flow Pattern Works

The analyst further explains that the key to understanding these movements lies in the pattern of money flow. Initially, investors flock to Bitcoin, and as Bitcoin’s price increases, profits are often moved into altcoins. This inflow of money to smaller altcoins with lower market caps results in significant price increases for these assets.

The historical pattern shows that after Bitcoin reaches an ATH, its market dominance declines, which has been true for previous cycles. For instance, Bitcoin’s dominance fell to around 40% after the third halving, and after the second halving, it was about 35%.

Current Market Indicators: Bearish or Bullish? 

Bitcoin’s dominance is at 54%, though still at Bitcoin season. There is a slight decrease this week from 55.04% to 54.68%. This small drop suggests that some altcoins have started to outperform Bitcoin. Wise Advice believes that we are likely at the beginning of a cycle that will eventually lead to a new altcoin season. According to historical data and market trends, after the next Bitcoin ATH, we can expect a period where altcoins will see significant gains.

Is Altcoin season finally here? Tell us what you think.