Altseason Alert: Bitcoin Dominance Crumbles, Altcoins Primed

• Crypto markets are caught in an accumulation period at present.
• This week saw markets sell-off, with Bitcoin sinking to a new local price bottom.
• A strong bounce in altcoins adds to calls of an incoming altseason.

Bitcoin tumbled to a nine-week low this week following the Fed’s decision to leave rates unchanged. Although the leading cryptocurrency has since made a muted recovery, growing 1.4% over the last 24 hours, altcoins have largely outperformed. A handful of the top 100 tokens, including PEPE, Wormhole, and Arweave, posted double-digit gains.

Amidst this backdrop, Bitcoin Dominance (BTC.D) plummeted on Wednesday, which, coupled with altcoin overperformance, points to a potential altseason in the making.

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Bitcoin Dominance Tops Out

BTC.D took a significant dip on Wednesday, falling from 54.87% to 53.91%, marking a four-week low while adding to calls of an incoming altseason.   

BTC.D daily chart per Trading View

Bitcoin’s crypto market dominance has been trending lower since recording a year-to-date high of 57% on April 13. This trend has caught the attention of YouTuber Scott Melker, who believed this may have been the local top for Bitcoin Dominance.

Trader “Mikybull 🐂 Crypto” noted that Wednesday’s dip in BTC.D broke below a rising wedge pattern, and combined with bearish divergence on the Relative Strength Index, led him to conclude the move is the start of a downtrend that will culminate in an “explosive altseason.”

However, while altcoins appear to be outperforming Bitcoin, that in itself is not a confirmation of altseason.

Altseason On?

There is no definitive agreed-upon definition of altseason. Still, these periods are typically characterized by outsized gains in altcoins relative to both Bitcoin and fiat currencies like the US dollar. Altseasons represent a shift in investor sentiment, as the dynamic involves capital flows out of Bitcoin into altcoin projects, reflecting a heightened appetite for risk among crypto investors.

A willingness to embrace higher-risk, higher-reward opportunities underscores the optimism and bullish sentiment that typically pervades the market during an altseason.

Wednesday’s sell-off in crypto markets was met with a strong bounce in altcoins, as denoted by the long bottom wick on the daily May 1 candle of the total crypto market cap, excluding the BTC chart. This indicated that investors were quick to accumulate altcoins at discounted prices.

Total crypto market cap excluding Bitcoin per Trading View

However, bears rejected a break above $1 trillion on Wednesday and again on Thursday, suggesting that altseason is not yet here. 

On the Flipside

• There are countless incidents of Bitcoin Dominance waning, yet no altseason arrives .
• Altcoins benefit from outsized percentage gains (and losses) due to having smaller market caps.

Why This Matters

Booming altcoin prices would foster renewed optimism, likely attracting fresh capital and interest in cryptocurrencies.

Get the lowdown on spotting altseason here:
Altcoin Season: Tips and Tactics for Market Research

Mid-week crypto market sell-off stokes investor anxiety:
Crypto Bear Sentiment Grips Investors as Fear Spikes