The past week has been an amazing week for crypto, more specifically Bitcoin.
The hype around the Bitcoin ETFs probably being given the go ahead by the SEC in January, together with signs of weakened inflation and possible interest rate cuts coming in Q1 2024 has made the market bullish.
Bitcoin has rallied almost 65% in less than 2 months!
It definitely feels like a Bull market for Bitcoin, but can one say the same for altcoins?
It's very easy to fall into the trap of looking at altcoin charts and see them pump against their USD valuation and think that it's also a bull market for altcoins, however, history shows that the USD valuation is not always the best indicator for this. It may not give us a full picture of what is really going on and we may be blinded by the gains we are seeing to get a grasp of what is really happening in the crypto sector.
The first chart we need to look into is the Bitcoin Dominance.
The Bitcoin dominance chart compares the Bitcoin valuation as a percentage to the rest of the entire crypto sector (including stablecoins). Not only has it been pumping for the entire year, but it has also made a higher high with it's latest move. Which could indicate that Bitcoin might be gearing up to hitting the 60% mark sooner rather than later.
As of now, Bitcoin dominance is rising simply because Bitcoin is outpacing Altcoins in its pumps. But this is not the only way bitcoin dominance can pump.
A) If Bitcoin Price is Rising, Altcoins will pump with it but not at the same pace = Bitcoin Dominance Pump
B) If Bitcoin Price is going sideways, and altcoins start retracing their gains = Bitcoin Dominance Pump
C) If Bitcoin Price starts dumping, altcoins will probably dump even harder than Bitcoin = Bitcoin dominance Pump
These scenarios could all indicate how Bitcoin dominance could reach 60% in the coming months. So far, we have already seen A & B play our during this year. In fact, if you take a look at most altcoins against their bitcoin pair, for example ADA/BTC you would notice that these charts have been in a downtrend
In fact, another chart we can look at that can give us a clearer overview of all altcoins pairs is the following
Total3/BTC is a chart that shows the marketcap of Altcoins (except for Ethereum) against Bitcoin and this chart is showing something quite worrying in my opinion. We are currently at risk of breaking down towards levels that we haven't seen since 2021. Although this may not necessarily mean that altcoins are in for a severe crash against their USD valuation they are most likely going to see a severe down trend against their BTC valuation. Considering that Bitcoin is already trading at 44k usd at the time of writing this article, I would not be surprised if we see Bitcoin retrace back to the Bull Market Support Band (around 33k - which could rise up to 35-37k until we actually hit it) before the Bull Market actually begins. However, this would mean that if Bitcoin is going through a downtrend for the next couple of months, Altcoins are going to sink even harder than Bitcoin.
This, could be where generational wealth in Altcoins can be made. And this, is also why Bitcoin is the best crypto to invest in during a bear market. Bitcoin always leads the way into a new cycle no matter what the narrative is, altcoins simply follow in the steps of Bitcoin after it clears the path for them to outpace it.
Let me know your thoughts about this in the comments below! Interested in hearing your arguments and/or questions!
Happy Trading and Stay Safe!
P.S : Are you looking to get into crypto or own crypto and want to find a trustworthy exchange to safeguard your crypto and earn interest on them? Check out NEXO. They offer yields simply for using their wallet ( no staking required), 2% Cashback in crypto when spending, Free Credit Line, Non-Custodial wallet and Much more! Check it out HERE and get $25 in BTC for free!
