- Bitcoin continues to show all-time highs but has slowed down nonetheless
- Its dominance has fallen while altcoins show likely signs of growth
- Historical data from past alt seasons seems to be repeating itself
Bitcoin has been showing all-time highs recently, breaking above $98K and targeting $100K, but its dominance is falling.
In addition, altcoins are probably showing signs of potential growth, and we have already seen these signs in the past alt season.
Let’s take a closer look at the likely scenarios for Bitcoin, how its dynamics could potentially affect altcoins and the signs that could theoretically point to their potential growth.
More About Bitcoin Dynamics, Altcoins, and Their Relations
Altcoins are showing interesting signals that we saw as the earliest stages of the previous bull market. These signals probably can repeat and predate the period in which there was a huge pomp in the altcoin market in 2021.
That being said, we can see Bitcoin recovering from the rather significant correction it experienced just a couple of days ago, and all we need to understand now is why this drop occurred and what the signal for altcoins is.
Basically, the correction is happening because long-term holders have started selling their Bitcoins.
Even those who have held Bitcoin for more than 10 years and it’s only honest. Their early investments in the project in the form of just a few hundred dollars have now given them tens and hundreds of thousands, and some even millions. They want to get their reward and lock in a profit.
However, seeing this the short-term investors who just got into Bitcoin on this pump from $98K to $99K went into a panic and sold thousands of Bitcoins at a loss to themselves.
This is also a natural behavior for a newcomer who just decided to buy and on this endless growth as it seemed to them, but as soon as the usual correction happened they immediately got rid of his Bitcoins with a disadvantage for himself.
While they were selling Bitcoins another very important event happened, namely the dominance of Bitcoin started to fall.
This is a very important factor, as Bitcoin dominance represents the percentage of the total amount of money in the crypto market that is concentrated in Bitcoins. Until now, when Bitcoin was falling, altcoins were falling even more, which led to Bitcoin’s increasing dominance.
But the latest correction did not see this familiar pattern, and Bitcoin’s drop from $99.8K to $90K did not cause altcoins to crash by 20-40% as many expected.
On the contrary, Ethereum has already shown itself to be stronger and some altcoins have even managed to grow.
This caused Bitcoin’s dominance to break this long-term trend and begin to fall, and it has fallen more than at any other point in time since 2021.
Let’s look back at a similar moment on January 3, 21, where we can see that Bitcoin’s dominance was at its peak and then plummeted this was the moment when the altcoin started to altseason in 2021.
And we’re seeing a similar dynamic right now. Bitcoin is barely growing, but we see a huge number of altcoins that are growing stronger.
Let’s look at this chart. This is the Bitcoin price we had a market peak in 2021 (1), then we went into a bear market (2), and after a long accumulation (3) we broke through the major resistance (4) and started testing the highs of the previous peak (5). Around these highs, we consolidated for about eight months (6) then the breakout occurred (7). Note that exactly when we saw the MACD reversal from red to green, the moving averages formed this crossover and the breakout was rapid.
Now let’s take a look at the chart of all cryptocurrencies except Bitcoin, and you may already see some patterns. Peaked in 2021 (1), then and moved into a bear market (2), then accumulated for a long time (3), finally broke through the major resistance range (4), now we are at the point (5) in which we should probably reach the highs of the previous market peak. MACD has not turned green yet, but we already see crossovers on the slides.
If things continue to follow this pattern, altcoins could probably reach the previous peak, then consolidate near that peak and break out when the MACD goes from red to green.
Will Bitcoin Continue to Rise and Will People Start Selling Bitcoins to Buy Altcoins?
The good news is that while we have seen long and short-term holders selling Bitcoin, we have also seen Bitcoin ETFs such as those from BlackRock buying. This not only kept it from falling further but also allowed its price to recover.
This is certainly good for Bitcoin, but it also supports the growth of Alcoins, because later this liquidity can go to them as well. So here is the recent drop in Bitcoin if we stretch the Fibonacci grid we can see that Bitcoin is bouncing off key levels. We found support at 0.618 and now we are starting to stabilize above the 0.5 level.
This is a very important level to hold and if Bitcoin does so, we are likely to see continued growth soon and move back to these tops.
Does this mean Bitcoin will never fall now? Of course, it doesn’t. The likely continuation of this scenario would be for Bitcoin to rise to $106K – $107K, after which we could see a huge correction all the way down to this moving average which has served as support throughout the bull market.
And then we can bounce off that moving average and go above $106K.
Ok, what about altcoins? We see that on the CryptoBuble most of the top 100 coins are steadily rising, but if we look at the top 1000 coins we see that not all of them, and the rest are still in the red zone. This could mean that it is very early in the bull market for altcoins.
Usually, not all coins grow at the same time. Coins with larger capitalization show the best growth first, as we already see it, then coins with medium capitalization, and then coins with low capitalization.
First, it is better to pay attention to the L1 coins, the large ones with a large enough capitalization that have already grown well. For example, Solana, Sui, Avalance – this L1 coin should start to grow TVL and volumes, then you can try to pay attention to those coins from their ecosystems, which as a consequence may have the growth potential.
There is a good analogy where coins are like digital cities where you can build something.
If this city has a welcoming and transparent infrastructure, a lot of good restaurants hotels, parks, and so on to cover the different needs of the residents – then a lot of people will want to invest in it, will want to move to this city and bring their money there. As a consequence, prices in that city will rise.
If the city is not good for construction, if there is a high crime rate, if roads are falling apart and businesses are dying there – then people will not want to live and build there, and such cities will not develop.
Therefore, cities that are good to live in where it is good to build something and in which there are a lot of interesting things are those places to which you should pay attention.
Conclusion
Think critically, and evaluate coins holistically, considering not only the rise and fall of prices and volumes but also technological and infrastructural indicators.
And of course, remain cautious, especially in times of such a dynamic market, and be aware.
