Bitcoin (BTC) dominance continues to decline despite the leading digital asset recording a relief rally in recent weeks. Notably, Bitcoin’s dominance is a crucial metric for the crypto industry, as it could have further implications on the possible price trajectory of most assets, especially altcoins.
Indeed, by November 5, Bitcoin market dominance had plunged to a more than four-year low of 38.67%. The digital asset last saw a similar decline in market dominance on June 10, 2018, to 38.19%, according to data from CoinMarketCap.
The decline aligns with a historical premise that once Bitcoin dominance drops characterized by rising value, it offers a hint of a possible altcoin season.
Implications of Bitcoin’s Decline in Market Dominance
Bitcoin dominance is the ratio of the market capitalization of the asset to that of the rest of the cryptocurrency market. Over the years, the metric has emerged to have different ramifications across the entire digital asset industry. The metric usually signals potential market outcomes and influences trading decisions.
Additionally, amid Bitcoin price decline and growing dominance, the scenario usually points to a possible altcoin bear market. However, when Bitcoin price and dominance drops, it could signal a potential downtrend for the general crypto market.
Also, when Bitcoin’s value and dominance is rising, it is a potential bull market indicator, while if Bitcoin’s price is rising with falling dominance, it indicates a possible altcoin bull market.
Bitcoin rallies amid falling dominance
Interestingly, this is the case with Bitcoin’s current price trajectory, having regained the $21,000 level, trading mostly in the green zone over the past 30 days. The asset is still trying to break out of the bear market despite the weight of the prevailing macro factors including soaring inflation and rising interest rates.
In recent weeks, the flagship cryptocurrency has mostly traded around $20,000. However, a positive US jobs report saw the crypto rally break above $21,000 to trade at $21,214 at press time.
Altcoin dominates with positive returns
In general, many altcoins have seen a relief bounce recently, with Bitcoin’s dominance remaining below 40%. For example, data from Blockchaincenter indicates that altcoins dominate the top 50 best performing assets.
In this case, the top 14 assets with positive performance are occupied by altcoins, while Bitcoin sits in 20th place with returns of -8.5% over the past 90 days.
Overall, altcoins have garnered increased attention through key feedback triggers, attracting buying pressure as Bitcoin bulls appear to have a technical advantage over bears. Notably, the market has seen several breakout coins, although there is widespread pressure as investors remain cautious.
Amid the breakout, meme cryptocurrencies are taking center stage. In particular, over the past 90 days, Dogecoin (DOGE) has posted returns of 81.7%, mainly inspired by the acquisition of Twitter Twitter (NYSE: TWTR) by Elon Musk. Elsewhere, as Finbold reported on October 30, DOGE gained more than 115% in one week. Yields have also been bred in Shiba Inu (SHIB).
Likewise, Ripple Labs native token, XRP, is on the rise, mainly thanks to a positive outlook in the case with the Securities Exchange Commission (SEC).
The prevailing market conditions will be vital for the emergence of an eventual altcoin season, as they will influence investor interest. At the same time, the crypto market is looking for a possible bottom in price that could trigger a possible bull run. For example, with the economy threatened by a possible recession, risky assets could potentially benefit if the Federal Reserve eases its tightening policy.
Furthermore, investors are hoping that the general market will build on its “Uptober” momentum to make further gains towards the end of the year.
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