Within a short period of just fourteen days, the dominance of Bitcoin [BTC] has seen a noticeable increase from 57% to almost 60%, solidifying its hold over the cryptocurrency market amidst strong competition from other digital assets.
Despite this significant milestone, the price of BTC has continued to hover below $68,000 for an entire week without much change. If this pattern persists, the increased dominance could potentially indicate a market peak, with the current price acting as a crucial psychological barrier.
Conversely, the prevailing market sentiment is heavily influenced by important macroeconomic factors. Anticipated changes in monetary policy due to the upcoming election results may introduce volatility to BTC in the week ahead. This scenario underscores a broader issue at play.
The Growing Trend of Risk-Averse Investors
The landscape of the cryptocurrency market is undergoing a notable transformation. While Bitcoin continues its upward trajectory, alternative coins are struggling to keep pace.
Presently, only 14 of the top 50 altcoins have managed to outperform BTC in the past 90 days, representing a mere 29% of their combined dominance. Meanwhile, Ethereum has experienced a decline of over 7% in market share within just a month, now sitting at 13% as of the time of writing.
In essence, there is a perception that Bitcoin serves as a safe harbor during times of increased market uncertainty. With regulatory concerns looming, it is expected that more capital will flow into BTC, potentially further impacting the high-cap altcoins.
The total amount of Bitcoin stored on exchanges has reached a new low, a trend often associated with market bottoms during bullish cycles. This trend, coupled with other indicators, suggests a potential shift in sentiment among investors.
Analysis from CryptoCrypto indicates that as the election frenzy subsides, a greater number of investors may turn to Bitcoin – at least until a clearer regulatory framework emerges.
This situation indicates a neutral short-term outlook for BTC, as market participants seek stability amid uncertain conditions.
Prospects for Short-Term Growth in Altcoins
While Bitcoin stands to benefit from the current market volatility, altcoins may also witness movement. Nonetheless, a full-fledged altcoin season seems unlikely in the near term.
Even though altcoins could witness some positive momentum, their performance remains closely linked to that of Bitcoin.
As a result, CryptoCrypto rules out the likelihood of a robust altcoin season unless post-election developments foster a more favorable sentiment towards altcoins or if Bitcoin dominance nears 70%, signaling market overheating and a potential peak.
Currently, on-chain data points to $67,000 being a significant support level for BTC. With expectations of heightened volatility in the coming week, Bitcoin appears primed to challenge its previous resistance at $69,000 and may even reach a new all-time high.
Consequently, altcoins are also exhibiting a positive outlook in the short term, hoping to capitalize on Bitcoin’s favorable trajectory. Nevertheless, the much-anticipated altcoin season remains a distant possibility.