Bitcoin Dominance Reaches 58.9%, Are Altcoins in Trouble?

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As Bitcoin (BTC) approaches $70,000, its dominance in the broader crypto market has climbed to a cycle peak of 58.9%.

Bitcoin Dominance Increases: Are Altcoins at Risk?

Bitcoin dominance (BTC.D), which measures the share of the total cryptocurrency market capitalization held by the leading digital currency, has reached a new cycle peak of 58.9%. The last time such a level was seen was in April 2021.

After a brief pullback following Iran’s assault on Israel earlier this month, Bitcoin has surged nearly 10% during the last week, trading at $67,769 at the time of writing.

Simultaneously, the total market cap of cryptocurrencies skyrocketed from $2.26 trillion on October 8 to $2.41 trillion on October 16, as per data from CoinGecko. However, this increase in total crypto market cap is driven significantly by Bitcoin’s rising price.

At the beginning of October, BTC.D was around 57.1%. It has since risen by about 1.8%, highlighting Bitcoin’s robust performance compared to altcoins like Ethereum (ETH), Solana (SOL), Binance Coin (BNB), and others.

The current BTC.D level raises concerns about the anticipated onset of “altseason,” usually marked by significant price increases in altcoins and a drop in BTC.D. BTC.D peaked at 70% during the post-COVID bull market in 2020-21 before falling to 40% in mid-2021.

By late 2022, BTC.D had fallen to about 39% amid the FTX collapse, which was forced into bankruptcy due to fraud allegations against its leadership. Since then, BTC.D has been steadily climbing, as illustrated in the chart below.

ETH/BTC Ratio Needs to Recover for Possible Altseason

As BTC.D continues to escalate, the ETH/BTC trading pair warrants discussion. For those unfamiliar, the ETH/BTC trading pair – commonly referred to as the ETH/BTC ratio – measures Ethereum’s (ETH) performance relative to BTC.

Currently, the ETH/BTC trading pair is at 0.0385, a level not seen since April 2021. The chart below indicates that Ethereum has struggled to reach a higher high against Bitcoin since at least November 2022, reflecting weakness in ETH’s price action over the past two years.

A robust performance by ETH against BTC often precedes an altseason, yet there are no definitive indicators of a significant trend reversal.

Additionally, the total value locked (TVL) in decentralized finance (DeFi) projects across different blockchains has declined from nearly $110 billion in June 2024 to $88 billion, reflecting weak interest in altcoins among crypto traders.

Nonetheless, several crypto analysts and technical indicators indicate that a potential altseason may be forthcoming.

For instance, earlier this month, the altcoin market cap surpassed its 200-day exponential moving average (EMA), a critical resistance level that indicates strong recent altcoin performance.

Similarly, Steno Research recently noted that ETH is poised for a resurgence following the US Federal Reserve’s interest rate cuts. Currently, BTC is trading at $67,769, reflecting a 2.5% increase in the past 24 hours.