What decides if it is a Bull run? What decides the seasons? How is an Alt-coin season formed? How is Total Crypto Market cap affected?
Let's dive right in:
1) What is Bitcoin Dominance?
In simple words, Bitcoin Dominance (BTC.D) is the percentage of Total Crypto Market cap owned by Bitcoin. Or in other words, the ratio of the market cap of Bitcoin, to the rest of the cryptocurrency market caps.
Since Bitcoin is the Grand Daddy in the crypto space, it is only predictable to know that even today (09 Sep 2021), BTC.D is at a whopping 40% (which is apparently LOW!)
During the initial years of the Crypto market, say during early 2010s, Bitcoin Dominance would have been 100%, as it was the only tradable crypto at that time!
2) What is an Altcoin season?
Any crypto other than Bitcoin is called an Altcoin. When 75% of the Top 50 Alt-coins perform better than Bitcoin over a period of past 90 days (called a season) is known as an Altcoin season!
An Altcoin season usually starts after the Bitcoin tops, as pele start taking profits off the Bitcoin and start pumping the alts.
3) Bitcoin Dominance - The King Maker
Kingmaker is someone who brings people to power and who throws people out of power. Basically, he's the one who decides the ultimate fate.
Let us see how Bitcoin Dominance affect the market cycles:
A) BTC.D INCREASES
It means that Bitcoin's share of market cap is increasing. In such a scenario, the following things may occur:
Ai) BTC is increasing
BTC.D and BTC both increasing means that it is a Bitcoin bull run in full flow. In such a scenario, the Alt-coins usually bleed.
Aii) BTC is decreasing
Can this happen? Yes. BTC.D increasing, but BTC decreasing means that Alt-coin markets are decreasing more than Bitcoin. In simple words, alt coins become DUST
Aiii) BTC is stable
It means nothing is moving as such. Alt coins might be slightly decreasing in market caps.
B) BTC.D DECREASES
Bi) BTC is increasing
With BTC.D decreasing, but BTC rising, means that Alt coins are rising further and are performing better than Bitcoin: An Altcoin season!
Bii) BTC decreasing
Both decreasing means that BTC.D might be decreasing because BTC is decreasing. Alt-coins might be stable
Biii) BTC stable
BTC.D decreasing while BTC doesn't move means that Alt-coins are performing well (better than Bitcoin)
4) Total Crypto Market Cap
Now BTC.D can be combined with Total Crypto Market Cap for further insight.
Rising Total Market Cap (TMC) with rising Bitcoin Dominance usually means BTC is also rising along with it, and usually means a Bitcoin bull run
Rising TMC with BTC.D decreasing means an Altcoin season
Falling TMC with BTC.D rising means that either everything is falling, or that BTC is rising with Alt-coins bleeding. But, in the current scenario where Bitcoin is still the Big Daddy, falling TMC with rising BTC.D usually means BTC falling with Alt-coins falling faster
Falling TMC with falling BTC.D mostly suggest a scenario where Alt-coins are stable.
5) Current scenario
Total Market Cap will soon break the All Time High, while the Bitcoin Dominance is still very low. It means this could have been an alt season at its peak, waiting to turn into a Bitcoin Bull Run. Beware Altcoin holders, it appears as if the King is just waking up to begin its hunt.
Thanks for reading till the end! I know this article can be a bit confusing for crypto newcomers at first read, so you may save it to read again and again until it clarity arrives!
I have tried to be as simple in my words as possible.
PS: This is not Financial Advice!
If you find any mistake in this article, do point out in the comments!
Cheers 😊!
