Bitcoin Dominance Soars to New High: Is Altseason on Hold?
Bitcoin’s Reign Continues: Dominance Hits New Cycle High
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As Bitcoin (BTC) edges closer to the $70,000 mark, its dominance over the broader crypto market has reached a new cycle high of 58.9%. This dominance, measured by Bitcoin Dominance (BTC.D), reflects the proportion of the total cryptocurrency market cap controlled by Bitcoin. The last time we saw this level of BTC.D was back in April 2021.
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Following a slight dip earlier this month after Iran’s attack on Israel, Bitcoin has surged almost 10% in the past week, currently trading at $67,769. Concurrently, the total crypto market cap has risen from $2.26 trillion on October 8th to $2.41 trillion on October 16th, according to CoinGecko data. This overall market growth, however, is largely attributed to Bitcoin’s price surge.
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At the beginning of October, BTC.D hovered around 57.1%. Since then, it has climbed by approximately 1.8%, highlighting Bitcoin’s strong performance compared to other altcoins such as Ethereum (ETH), Solana (SOL), Binance Coin (BNB), and others.
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Altseason Uncertain: A Look at ETH/BTC Ratio and DeFi TVL
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The current BTC.D level has cast doubt on the anticipated arrival of “altseason,” typically marked by rapid price increases in altcoins and a decline in BTC.D. Notably, BTC.D peaked at 70% during the post-COVID bull market in 2020-21 before dropping to 40% by mid-2021. In late 2022, BTC.D reached its lowest point at around 39% amidst the collapse of FTX, which ceased operations due to fraud charges against its leadership. Since then, BTC.D has been steadily rising, as illustrated in the chart below.
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As BTC.D continues to climb, it’s crucial to consider the ETH/BTC trading pair. This pair, commonly known as the ETH/BTC ratio, tracks Ethereum’s (ETH) performance against Bitcoin. At the time of writing, the ETH/BTC trading pair stands at 0.0385, a level last seen in April 2021. The chart below demonstrates that Ethereum has failed to establish a higher high against Bitcoin since November 2022, reflecting weak ETH price action over the past two years.
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Historically, strong ETH performance against BTC has often preceded an altseason. However, there are currently no clear signs of a significant trend reversal. Furthermore, the total value locked (TVL) in decentralized finance (DeFi) protocols across all blockchains has decreased from nearly $110 billion in June 2024 to $88 billion, indicating weak demand for altcoins among crypto investors.
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Signs of Hope? Altcoin Market Cap and Fed Rate Cuts
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Despite the current landscape, some crypto analysts and technical indicators still suggest that an altseason might be on the horizon. Earlier this month, the altcoin market cap surpassed its 200-day exponential moving average (EMA), a key resistance level that signifies strong altcoin performance in recent days. Similarly, Steno Research recently noted that ETH is poised for a comeback following the US Federal Reserve (Fed) interest rate cuts.
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BTC currently trades at $67,769, up 2.5% in the past 24 hours.
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Featured image from Unsplash, Charts from Tradingview.com