Within the last 24 hours, the crypto market witnessed liquidations totaling $2.18 billion, marking the largest liquidation event to date. While Bitcoin (BTC) recorded liquidations amounting to $409 million, altcoins faced more substantial losses.
The indication of this came both from the price movements and the rapid increase in Bitcoin Dominance (BTC.D) in recent hours.
This surge signified Bitcoin’s strength relative to altcoins. The BTC.D hovering above the 60% resistance range was unfavorable news for alternative cryptocurrencies. Nevertheless, stablecoin metrics hinted at a glimmer of hope.
With a considerable amount of selling pressure in the market, the query shifts from “when altseason” to pondering on the plausible outcomes for traders and investors in the upcoming months, including the potential for an altseason.
Available Resources to Seize Opportunities in Market Downturns
It is crucial to note that Bitcoin has not breached the lows of the two-month range at $92k, which should prevent panic among investors.
Examining Tether (USDT) metrics reveals the potential strength of buyers, as USDT Exchange Reserves have been increasing steadily over the last two years.
A rise in stablecoins held in Exchange Reserves indicates increased buying power within the market. However, it might take some time for bullish sentiment to return following the recent severe liquidation event.
The positive USDT netflows in recent weeks, particularly in November, present a promising outlook. Additionally, the transfer of stablecoins to exchanges signifying buying activities, although this movement has decelerated since December.
The Alarming Trend of Bitcoin Dominance
The historical rejections from the 60% resistance level on the BTC.D chart were observed in 2018 and 2019, during the bearish period following the 2017 bull market.
The current retest is transpiring in a bullish market year, assuming it is not reaching its conclusion, as none of the traditional BTC bull peak indicators have shown positive signals yet.
Technically, BTC.D is projected to climb further to 63.84% and 72.5%, which may be favorable for Bitcoin but detrimental to the altcoin market.
This scenario could be attributed to sustained ETF and institutional demand for Bitcoin, potentially sidelining altcoins in the process.
As the cycle progresses towards its peak, there is a possibility of an altcoin season emerging. This phase would involve a significant decline in BTC.D and substantial gains across the broader market as capital rotates from Bitcoin to alternative cryptocurrencies.
On the other hand, an altseason may not materialize at all due to the abundance of altcoins, leading to selective success for blue-chip coins and tokens with distinct value propositions.
Only time will unveil the outcome, hence investors must brace themselves for various scenarios.