As the US Presidential Election draws nearer, Bitcoin's dominance in the cryptocurrency market is surging, raising concerns for an impending altcoin season. Currently, Bitcoin's dominance (BTC.D) has reached its highest level since 2021, sitting at 59.77, the highest since April 2021. This shift comes alongside significant capital inflows into Bitcoin ETFs and a lackluster performance from many altcoins.
Bitcoin dominance measures the cryptocurrency's market capitalization relative to the total market capitalization of all other cryptocurrencies. The recent rise in BTC.D indicates that Bitcoin is increasing its market share, outpacing altcoins.
The demand for Bitcoin spot exchange-traded funds (ETFs) has surged, reflecting strong investor interest in the leading cryptocurrency. According to 10X Research, rising demand for BTC ETFs could potentially drive Bitcoin’s price to $100,000 by January 2025. In October alone, Bitcoin spot ETFs purchased $4.1 billion worth of Bitcoin, marking the highest volume since March 2024. The recent uptick in ETF purchases includes an additional $830 million acquired in a single night, indicating robust buy momentum.
As capital flows into Bitcoin ETFs, both individual and institutional investors are prioritizing BTC over less-established altcoins. This trend has led to decreased trading volumes and price momentum for altcoins. Since early August, TOTAL2, which represents the total market capitalization of all cryptocurrencies excluding Bitcoin, has consolidated within a range of $967 billion to $856 billion.
This consolidation reflects the uncertainty among altcoin traders about future price movements, resulting in reduced volatility and trading volume. Historically, an altcoin season is declared when at least 75% of the top 50 altcoins outperform Bitcoin over a three-month period. Recent data from Blockchain Center reveals that only 29% of these top altcoins have outperformed Bitcoin in the past 90 days—significantly below the 75% threshold necessary to declare an altcoin season.
As Bitcoin’s dominance continues to grow amid strong ETF demand, the outlook for altcoins appears increasingly bleak. With traders focused on Bitcoin and less capital flowing into the altcoin market, the potential for an altcoin season seems dim in the near term. Investors should remain attentive to market dynamics as they navigate these shifting trends in the cryptocurrency landscape.
October 2024, Cryptoniteuae