With Bitcoin’s fall below $90K, there was also a 2% reduction in its market dominance, a shift that some analysts believe could favor alternative cryptocurrencies.
One analyst known as Stockmoney Lizard highlighted a new trend where Bitcoin’s dominance decreased alongside its price drop, indicating a possible stabilization of altcoins.
“An interesting development is the simultaneous decline of BTC price and dominance… This suggests that many Altcoins are establishing support levels while Bitcoin hits new lows.”
Throughout the descent to $86K, Bitcoin’s dominance decreased from 62.28% to 60.9%. A decline in BTC dominance often signifies a transition of funds from Bitcoin to alternative cryptocurrencies.
A notable occurrence took place last November when the dominance plummeted by 10%, sparking a surge in altcoins that included XRP soaring by over 500%.
Bitcoin Dominance: Can Altcoins Make a Comeback?
Nevertheless, projections by analysts such as Arthur Hayes and Galaxy Digital’s Alex Thorn have suggested a potential price range of $75K-$85K for Bitcoin. Thorn’s forecast was based on chain price imbalances and he mentioned,
“Upon examining BTC’s supply based on last moved price (URPD), there’s a significant gap between $75-85k. The market might aim to test that range. The 200-day moving average stands at $81.6, potentially acting as a support level if we reach that point.”
If these predictions materialize and the declining trend persists, Bitcoin’s dominance could slide further, providing additional support to the alternative cryptocurrency market.
Significantly, several altcoins encountered considerable gains amidst Bitcoin’s struggles. Notably, Story [IP] and Celestia [TIA] surged by 34% and 22% respectively, ranking among the top daily performers on CoinMarketCap.
Furthermore, Hyperliquid [HYPE] and Maker [MKR] also displayed recoveries in the double digits during this period.
Simultaneously, the total market capitalization of altcoins rose from $1.16T to $1.17T, marking a $10 billion boost. Nevertheless, the altcoin season index stood at 25, indicating that it was still heavily influenced by Bitcoin.
An analysis of the ETH/BTC ratio by CryptoCrypto shed light on the state of the altcoin market. This ratio compares Ethereum’s price performance relative to Bitcoin, acting as a crucial indicator given Ethereum’s prominence in the altcoin sector.
The altcoin rally witnessed in November and December was characterized by 18% and 25% surges in the ETH/BTC ratio. Recently, this ratio surged by 8% as Bitcoin dominance dwindled, prompting positive movement in certain altcoins.
Despite these positive upturns, the ratio faces resistance at 0.03 and has retreated by 32% since December, potentially hindering a robust recovery in the broader altcoin sector.
It is clear that a weak ETH/BTC ratio could impede the sector’s resurgence, highlighting the importance of monitoring this benchmark closely.