Here’s Why Bitcoin’s Dominance Is Less Likely to Decline Soon and What That Means for Altcoins

Despite bitcoin’s price turmoil over the past week, Ki Young Ju, founder and CEO of market analytics platform CryptoQuant, believes the leading digital asset’s dominance is less likely to decline anytime soon.

Historical data shows that alternative cryptocurrencies (altcoins) have always rallied when BTC retraces and have seen a decline in market dominance during bull cycles.

Ju’s findings indicate that the altseason, where capital leaves BTC and flows into altcoins, may not be as close as market experts predicted.

Bitcoin dominance less likely to fall

According to Ju, Bitcoin’s growth rate during this cycle makes a fall in its dominance less likely. The asset’s growth this year has been fueled by several factors, including the launch of spot exchange-traded funds (ETFs) in the United States and President Donald Trump’s support for cryptocurrency during his election campaign.

Data from CoinmarketCap showed Bitcoin’s market dominance, which stood at 57% at the time of writing, with a slight drop over the past week and month.

Ju noted that during Bitcoin’s 37% market cap growth over the past few months, large-cap altcoins rose 16%, while small- and mid-market-cap cryptocurrencies gained 10%. . The only time small and mid-sized coins outperformed BTC was during the memecoin season in April; since then, BTC has remained in the lead.

Although it appears that BTC is making a comeback as investors take profits following the coin’s latest rally, Ju insists that the nature of capital flowing into the Bitcoin network could maintain the asset’s dominance and delay the season for a while. This BTC bull run is primarily driven by demand from spot ETFs and institutional investors, indicating a shift in capital inflows.

What is the fate of Altcoins?

With the exception of Ethereum, which represents 12.8% of the cryptocurrency market, other cryptocurrencies, including stablecoins and memecoins, represent 30.2% of the sector.

The 2021 bull cycle saw Bitcoin’s dominance drop to 40%, and altcoins accounted for 41% of the crypto market in the other season. This means that there is still room for growth among altcoins before they can see their rally.

For the market cap of altcoins to reach high enough levels to trigger the altseason, there must be a significant influx of new capital into crypto exchanges. Unfortunately for these crypto assets, institutional investors and ETF buyers have no plans to shift their investments from BTC to altcoins. Therefore, to trigger the next alt season, altcoins must either continue to rely on crypto exchange users or develop independent strategies to attract new capital.