Based on past market data, the altcoin season starts when Bitcoin’s dominance begins to drop. This shows that crypto traders have begun withdrawing their capital from BTC and investing in other digital assets.
The past few months have seen investors anticipate a significant decline in Bitcoin’s dominance to signal the onset of the next altseason; however, the opposite has been the case the metric has been on the rise. In an interesting turn of events, pseudonymous market analyst Rekt Capital has explained how a higher Bitcoin dominance increases the chances of a strong altseason.
At press time, Bitcoin accounted for 60.2% of the total crypto market share, according to data from CoinMarketcap. Ethereum held 10.3% of the total market share, while the rest of the cryptocurrencies accounted for 29.5%. Notably, Bitcoin’s dominance is up 2.64% in the past few days, while Ethereum’s and others have plunged considerably.
According to Rekt Capital’s analysis, every time Bitcoin’s dominance breaks into the 58%-71% macro range, it will touch the 71% top. Also, every time the metric gets as close as possible to 71%, it experiences a harsh rejection that triggers a strong downward trend, enabling a strong altseason.
Rekt Capital said this occurrence has been recorded three times historically, indicating that it is likely to be the case this time. Although Bitcoin’s dominance could top before 71%, the analyst said it is important to evaluate ways in which it could get close to the mark, but it still falls slightly short.
Currently, there is a weekly timeframe that portrays a potential scenario where a declining black diagonal resistance is developing. Rekt Capital said that Bitcoin’s dominance has historically tended to upside this trendline by 1.58% to 4.58%. This means the declining trendline could cause the metric to deviate to the upside and reach at least 67% or 69% before falling.
The endpoint remains that the higher the dominance is, the bigger the chance of a strong altseason.
“Ultimately, this is what is important to remember: It is not about trying to nail the absolute Bitcoin Dominance top. It’s about understanding the core principle that the closer and closer Bitcoin Dominance gets to 71% in this cycle. The stronger and stronger the possibility of an extensive collapse in Bitcoin Dominance becomes to finally enable a strong altseason,” Rekt Capital insisted.