Altcoin Season Looms as Bitcoin Dominance Hits 62%

Ethereum, the second-largest crypto asset and largest altcoin, has historically spearheaded an Altcoin Season due to its significant performance after the market shifts from a Bitcoin season to an altcoin season in each bull market cycle. Despite Ethereum's waning performance, an altcoin season is still likely to occur in the near term.

An on-chain expert and the CEO of Alphractal, Joao Wedson, believes that the sustained dominance of Bitcoin could be laying the groundwork for a significant altcoin season in the foreseeable future. Historically, altcoin seasons have followed periods of Bitcoin dominance. Wedson highlighted that Ethereum’s declining performance has hindered other altcoins in the ongoing market cycle, but an altcoin season “is just a matter of time.”

According to Wedson, altcoin dominance is declining, while altcoin dominance excluding Ethereum and Stablecoins has remained sideways and in a neutral zone since late 2022. This development implies that Bitcoin has drained most of Ethereum’s market capitalization. Presently, Bitcoin’s dominance has increased to 62%, and BTC and Stablecoin’s dominance has risen to nearly 71%. Meanwhile, Ethereum and all other altcoins dominate only 29% of the general market.

Bitcoin and Stablecoin’s market dominance may seem like a threat to the upcoming altcoin season. However, the higher the BTC and Stablecoin dominance rise, the more robust the next altcoin season will be, which Wedson claims is only a matter of time away.

Daan Crypto Trades, a technical expert and trader, has also shared insights on the subject, highlighting that the altcoin market cap has declined sharply, leading to a drop in altcoins’ dominance. Although it was on track for a while, the steady growth of Bitcoin and Stablecoins has put the alt dominance under serious pressure within the crypto market.

Given the dilution amongst them, individual altcoins have performed poorly. Thus, for altcoins to regain dominance over Bitcoin, Stablecoins, and other major assets, the ETH/BTC pair needs to gather some momentum first. Daan Crypto Trades claims Ethereum often plays a massive role in getting a wider altcoin performance. This is because many liquidity pools are denominated in ETH, and most coins are developed on it. Therefore, for altcoins to run, this wealth effect for ETH and majors is essential.

Until this is the case, the analyst urges investors not to get into the market. Even though alt rallies are usually brief, there is frequently a high timeframe retest. Once it is evident that the trend is changing, Daan Crypto Trades believes this is the ideal time to get involved in the action.