Bitcoin Dominance Nears 65.8% Altcoins Poised for Capital Rotation

The crypto market is experiencing a notable shift, with Bitcoin's dominance showing signs of weakening and altcoins poised to gain strength. Analysts have observed that Bitcoin's dominance is approaching the upper limits of a multi-year ascending channel, which could indicate an impending breakdown. This development is significant as it suggests a potential rotation of capital away from Bitcoin and into altcoins, potentially sparking an altcoin season.

The weekly BTC dominance chart reveals a rising channel that has been in place since early 2023, marked by consistent higher highs and higher lows. Historically, every touch of the upper and lower trendlines has resulted in reversals. However, with Bitcoin's market share nearing 65.8%, the risk of a downside breakout is increasing. A confirmed channel breakdown could serve as a strong signal for traders, with a downside target near the 58% zone. This would imply a significant capital rotation from Bitcoin into altcoins.

Meanwhile, the TOTAL2 chart, which tracks the total market capitalization of altcoins, presents a cautiously optimistic picture. Currently at $1.11 trillion, TOTAL2 is holding above the 0.382 Fibonacci retracement level from the previous move, with higher lows forming since the May correction. The price action has yet to make a decisive move, but the setup suggests that any weakness in BTC dominance could be the catalyst altcoins need to gain momentum.

The Relative Strength Index (RSI) is hovering around 43, indicating neutral to slightly oversold conditions. If the RSI climbs above 50 on rising volume, it could confirm a trend shift in favor of altcoins. Additionally, the Balance of Power indicator is still below zero but has shown bursts of accumulation, an early sign of buyer interest returning. If TOTAL2 continues to rise, potential Fibonacci extension targets lie at $1.4 trillion and $1.64 trillion. These levels mark critical resistance zones that, if broken, could unlock exponential upside for altcoins.

The current market sentiment is bullish, with Bitcoin hovering around $110,000 and altcoins gaining traction. This environment suggests that investors are moving their capital and/or profits to altcoins in search of higher returns, which typically triggers a wave of capital rotation into altcoins. According to the analyst's forecast, an altcoin season is very likely in the near future, with altcoins reaching unimaginable levels in no time. This shift could be particularly beneficial for low-cap altcoins with real technology or strong narratives, as they often see significant gains during such periods.