Altcoin Market Capitalization Expands 2.07% as Bitcoin Dominance Declines

The altcoin market has shown relative strength against Bitcoin since June 27, but it has not yet reached the levels seen in previous altcoin seasons. The altcoin market capitalization and Bitcoin Dominance charts provide crucial indicators for when such an altcoin season might begin.

The anticipated altcoin season has not yet arrived. Instead, Bitcoin has continued to set new all-time highs. For an altcoin season to occur, Bitcoin would need to enter a consolidation phase, allowing capital to rotate into altcoins and for the altcoin market to catch up. The recent rally past $122,000 did not cause the Bitcoin market to overheat, indicating that the rally has staying power. Altcoin investors may need to wait for their turn, but there are signs of optimism.

Ethereum has surged towards $3,000 and could break higher due to strong demand. A rallying Ethereum could potentially trigger an altcoin season. At the time of writing, the altcoin season index was just above 30, a level it has not convincingly breached since March. A reading below 25 implies a Bitcoin season, while a reading above 75 signals an altcoin season.

Bitcoin Dominance, which measures the percentage of the total market capitalization that Bitcoin holds, has been trending downward since June 27. A falling Bitcoin Dominance indicates that the altcoin market capitalization is growing faster than Bitcoin's. This metric has decreased by 2.07% in just over two weeks, already having a significant impact. The altcoin market has expanded beyond the $1.25 trillion market cap resistance zone, which could be an early sign of bullish intent. It is possible that the altcoin market capitalization could challenge the December high of $1.64 trillion in the coming weeks.

For this to happen, Bitcoin would need to continue growing. Altcoin holders are hoping for a large rally in Bitcoin to lead the crypto market. Typically, the final weeks of such a rally result in capital rotation, sending altcoins soaring in value over a short period—a phenomenon known as an altcoin season. This is usually accompanied by a sharp decline in Bitcoin Dominance. In the final months of 2017 and the first half of 2021, Bitcoin Dominance fell to the 40% mark. At the time of writing, Bitcoin Dominance was at 64.65%, still far from the 40% mark seen in previous cycles. It remains uncertain whether this cycle will follow the same pattern.