Bitcoin price declined by over $ 55,000 and is now falling again. In the meantime, altcoins like Ethereum continue to rise without being affected by the leading cryptocurrency by market capitalization.
The recent divergence between the front runner and the rest of the altcoins has caused Bitcoin dominance to plummet to levels not seen since 2017 and 2018. Could this be the official start of the altcoin season before the market cycle starts all over again?
BTC dominance is returning to levels not seen since the last Crypto Bull market
It has been more than 1000 days since the BTC dominance was last below the 50% level, indicating that altcoins had taken over the crypto market.
The last 1000 and then a few days were instead completely dominated by Bitcoin, reaching a peak dominance of up to 73% by the end of 2020.
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BTC.D, a metric that weighs the market cap of the highest cryptocurrency against the rest of the room, is now back below 50% and could be ready to hit new lows if an altcoin season really approaches.
Altcoins, which are gaining a lot more dominance this time around, make sense because since then there has easily been a multiple of the coins that have surfaced since then, and each market capitalization balloons individually.
A weekly close below that box starts altcoin season | Source: CRYPTOCAP-BTC.D on TradingView.com
What altcoin season means for Bitcoin, Ethereum, Litecoin and other top coins
If the altcoin season is really here, there are a few things crypto investors can expect according to past cycles. The start of the altcoin season doesn’t always mean that bitcoin’s run is over.
There were two distinct altcoin seasons during the 2017 bull run, only one of which ended the historic crypto market cycle. Altcoins outperformed a lot after Bitcoin, which is a scenario that could come into play now.
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But still bullish with Bitcoin, just because the altcoin season is here doesn’t mean the bull run for BTC is over. Instead, altcoin capital could flow back into BTC, propelling the top brass crypto asset even higher.
Once the coin hits the climax of the grand final cycle, another season of altcoin could act as exit liquidity before the cycle ends and everything starts to repeat itself all over again.
The largest and most respected altcoins like Ethereum and Litecoin would run first, then money will flow into mid-caps from the majors, and finally risk into small-caps for Moonshot-type profits.
The most important thing is to get out when it looks like things are about to end, as altcoins have a tendency to break down by as much as 99% if at some point they run out of steam and the momentum goes down instead.
Featured image from Pixabay, Charts from TradingView.com