- For an altcoin season to begin, Bitcoin dominance is likely to climb to between 62% and 70%.
- Nevertheless, several other metrics also warrant careful analysis.
In Q3, market sentiment surrounding altcoins was predominantly bearish, with Bitcoin [BTC] dominance increasing to around 57%, achieving a new all-time high. Currently, the Altcoin Season Index stands at 35, following its lowest point in mid-August.
Altcoins generally see better performance after Bitcoin dominance peaks. As Bitcoin secures market share early in a cycle, capital often transitions to altcoins once BTC dominance begins to decline. This trend typically favors altcoins, as investors look for higher-risk, higher-reward opportunities.
Statistically, Bitcoin’s market capitalization would need to increase by approximately $280 billion to enter the 62%-70% range necessary for an altcoin season to launch. Such growth is likely to occur when BTC reaches $80K, among other metrics.
Importance of High Bitcoin Dominance
Bitcoin’s dominance has seen a notable decline over time, falling from 90% in 2013—during the market’s early days—to a low of 39% in 2021, as altcoins started gaining momentum.
Source : X
Noteworthy is the fact that each altcoin season has been spurred by specific catalysts, such as the introduction of new cryptocurrencies, innovations like ERC-20 tokens, and broader trends like DeFi and NFTs.
This indicates that, in addition to Bitcoin’s market share, the unique contributions from altcoins will be vital in igniting the next altcoin season.
Currently, the market position of altcoins is too constricted to independently trigger a season, as altcoin declines often depend on Bitcoin’s performance for stability. A shift is likely to occur only if Bitcoin leads with an initial upswing.
This trend implies that Bitcoin’s price may need to surpass $80,000 to achieve a BTC dominance above 65%, potentially catalyzing significant capital inflows into the altcoin market.
The Need for a High-Risk Appetite
A recent report by AMBCrypto has pointed out an evolving trend in the altcoin market, urging Ethereum developers to implement strategic measures in the face of rising competition.
Internally, this calls for thorough evaluation, while externally, Bitcoin’s appeal is hindered by a growing risk deficit, indirectly affecting altcoins’ momentum.
Source : xe.com
With gold prices climbing higher due to interest rate cuts and geopolitical uncertainties, Bitcoin’s stagnant performance highlights a limited risk appetite for cryptocurrencies.
Historically, a rising BTC/Gold ratio has coincided with altcoin season. Thus, the current decrease in risk appetite negatively affects altcoin performance, suggesting that an uptick in the BTC/Gold ratio could signal better conditions in the future.
In summary, as BTC experiences a pullback, the declining BTC/Gold ratio signifies a movement of investors toward safer assets, undermining Bitcoin’s potential as a long-term store of value.
This trend emphasizes the critical nature of market confidence in BTC’s role as “digital gold” to sustain a wider altcoin rally—one that is likely to stabilize as BTC nears the $80K threshold.
Decreased ETF-Driven Momentum
Another element to consider is the correlation between Bitcoin’s price increases and ETFs. While ETFs generally contribute positively to market rallies, their influence on altcoins can differ. The ETF landscape has seen notable growth in 2024.
Source : The Block
Nevertheless, when ETFs dictate market trends, capital typically remains within Bitcoin or Ether instead of flowing into altcoins, as mainstream investors often have limited access to them. Instead, investment is likely to move towards crypto-related stocks.
Read Bitcoin’s [BTC] Price Prediction 2024-25
Consequently, a combination of internal and external factors continues to delay the arrival of altcoin season, which remains closely linked to Bitcoin’s price dynamics.
For altcoin season to materialize, Bitcoin would likely need to exceed $80K, a target that, considering the current dynamics, may be difficult to attain by the end of Q4.
