Altcoins
Bitcoin Dominance Collapses: Altcoin Season Approaching?
In the downtrend, many altcoins have suffered a bloodbath and have dropped almost 30% to 70% in price over the past few months. This huge decline has caused many analysts to doubt the altcoin season. However, recent developments in Bitcoin’s dominance provide a glimmer of hope for altcoins.
Want to know when to dive into altcoin season? Enter.
Understanding the dynamics of halving
Meanwhile, popular cryptocurrency analyst Wise Advice provides an in-depth analysis of how the Bitcoin halving cycle can predict the timing of the next altcoin season. The basic idea is that after each Bitcoin halving, which happens roughly every four years, there is a significant opportunity for altcoins to rally. This pattern has been consistent throughout Bitcoin’s history.
However, analysts suggest that investors may see this as an opportunity to shift their attention to altcoins, expecting a potential gain. Furthermore, for altcoin season, at least 75% of the top 50 altcoins must surpass Bitcoin.
Halving Impact on Altcoins
After each halving, it takes about 1-1.5 years for Bitcoin to reach a new all-time high (ATH), and this is the boom period for altcoins such as Ethereum, Solana, and Polkadot. For example, after the third Bitcoin halving on November 9, 2021, Bitcoin reached its ATH, and shortly after, Ethereum reached its ATH of $4,800 on November 10, 2021. Solana reached $250 just five days before, while Polkadot peaked at $55 on November 4, 2021, and Avalanche reached $146 on November 21, 2021.
Similarly, during the second bull halving cycle in December 2017, Ethereum rose to $1,400 in early January 2018. The first bull halving cycle in November 2013 saw Litecoin rise from $2 to $53.
How the Money Flow Model Works
The analyst further explains that the key to understanding these movements lies in the money flow model. Initially, investors flock to Bitcoin, and as the price of Bitcoin increases, profits are often moved to altcoins. This influx of money into smaller altcoins with lower market caps leads to significant price increases for these assets.
The historical pattern shows that after Bitcoin hits an ATH, its market dominance declines, which has been true for previous cycles. For example, Bitcoin dominance dropped to about 40% after the third halving, and after the second halving, it was about 35%.
Current Market Indicators: Bearish or Bullish?
Bitcoin dominance is at 54%, although still in Bitcoin season. There is a slight decline this week from 55.04% to 54.68%. This small decline suggests that some altcoins have started to outperform Bitcoin. Wise Advice believes that we are likely at the beginning of a cycle that will eventually lead to a new altcoin season. According to historical data and market trends, after the next Bitcoin ATH, we can expect a period where altcoins will see significant gains.
Is altcoin season finally here? Tell us what you think.