Can altcoins gain ground as Bitcoin dominance weakens?

Bitcoin Dominance has been falling June from 56% last week to under 55% as June concludes. The falling ratio is accompanied by a price weakness with only optimistic expectations from altcoins in the current cycle.

Also Read: Bitcoin’s weekly close could pave way for new all-time highs

Analysts have often noted that Bitcoin’s fading dominance could make way for the rest of the crypto market to a chunk of the lost share, making them gain ground.

Bitcoin Dominance is on a decline

Bitcoin Dominance is down almost 2% in the last 7 days until June 25. According to TradingView charts, the ratio now stands under 55%.

BTC Dominance takes a hit | Chart:TradingView

In the last year, Bitcoin Dominance has gained almost 6% ground, a gain that seems to be now dwindling with weakness in its price. On June 25, Bitcoin managed to surpass the crucial level of $61,000 from the $70,000 price range reached at the start of the month.

Andrew Kang, the Managing Partner of defi investment firm Mechanism Capital, expects that the price drop can continue.

What is the Mt Gox connection?

According to Kang, the $9-billion repayment plan of the failed crypto exchange Mt Gox could be partially responsible for the slide. Comparing the price action to May 2021, the executive believes that leverage-heavy short-term buyers have flooded the market with ETF profit taking adding to the pressure.

“These moves typically result in a multi-billion dollar cascade,” he added.

CoinShares’ Digital Asset Fund Flows Weekly Report also hints at a correction. Outflows from digital assets at the week close of 21 June exceeded $580 million. Bitcoin reportedly lost $680 million in investor funds with the week recording “the lowest volumes traded on ETPs globally since the US ETFs were launched in January.”

Also Read: Mt Gox repayments to creditors may not affect Bitcoin as expected

While these factors continue to pressure Bitcoin dominance, can it be an opportunity for altcoins?

Altcoins can dominate the second half of the bull run

The inflows were not significant for the crypto category with Ethereum outflows exceeding $58 million. Solana, Litecoin, and XRP recorded minor inflows with -0.3 million in outflows for Cardano.

Crypto analyst Dami-Defi finds that the market value of altcoins is set to rise with the fall in Bitcoin Dominance, marking the onset of the altcoin season.

 

According to commentator CryptoAmsterdam on X, a Bitcoin bull cycle is usually followed by a parabolic rise in altcoins. The influencer believes that Bitcoin is the first to lead this bull run before the altcoins, led by Ethereum, take over in the second half.

Also Read: Bitcoin’s June 2024 – How low can BTC go?

“When dominance drops, Bitcoin breaks its ATH, ETHBTC breaks up, and the Altcoin total market cap breaks out, the market will become less PvP [player-vs-player] (and less meme-focused),” he added .

Analyst TechDev thinks that alts have already reached the bottom of this cycle as Bitcoin market dominance shows signs of bearish divergence.  A bearish divergence is an indicator of reversal and can continue a decline.

Cryptopolitan reporting by Shraddha Sharma