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While Bitcoin continues to take a beating in terms of dollars, the top cryptocurrency also continues to lose its share over the market cap. In fact, with the most recent support level breached, BTC dominance could be targeting historic lows.
Historic lows in BTC dominance could mean that an altcoin season unlike ever before is potentially ahead. Here’s a closer look at the metric that weighs Bitcoin against the rest of the crypto space and how it could impact altcoin performance.
Bitcoin Continues To Lose Cryptocurrency Market Dominance
At one point, there was only Bitcoin. As the industry grew, a metric was born called BTC dominance that made it more clear how much weight the top coin had compared to the rest of the market.
Prior to 2017, Bitcoin accounted for as much as 95% of the entire cryptocurrency market, but fell to a low of 35% less than a year later during what is considered to be the greatest altcoin season on record.
Related Reading | 2022: The Year The Secular Bitcoin Bull Run Could End
After reaching such extremes in 2018, by 2020, Bitcoin had recovered more than two-thirds of the market cap. Dominance topped out near 70% where it sharply reversed all throughout 2021.
At the close of the 2021 yearly candle, a several year trading range was officially breached. The well defined range is even more visible in the six-month BTC.D chart. And it could create the conditions necessary for an unprecedented altcoin season.
The yearly (left) and six-month (right) BTC.D chart | Source: CRYPTOCAP-BTC.D on TradingView.com
Unprecedented Altcoin Season Could End At 32% Dominance
With a decisive close on high timeframes, lower timeframe patterns could provide clues as to where dominance might bottom out once again.
Related Reading | Bitcoin Falls Flat: Examining A Rare Bull Market Corrective Pattern
The target of a head and shoulders top sent BTC.D to the dashed line, reinvigorating altcoins but still falling short of the mania seen during the 2017/2018 peak.
A descending triangle could target 32% dominance | Source: CRYPTOCAP-BTC.D on TradingView.com
With a potential descending triangle breaking down, the measure rule would make the target of the structure around 32% dominance. The target would suggest a move beyond the former historic low set years ago – and create the atmosphere needed for the aforementioned altcoin season mania.
But it all could come at the expense of Bitcoin and its undisputed reign as the number one cryptocurrency by market cap.
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Featured image from iStockPhoto, Charts from TradingView.com