09.12.2021

Bitcoin dominance drops below 50 percent

Are you waiting for the “altcoin season” or the so-called altcison? According to experts, very soon we may witness its culmination. The main prerequisite for this event is a noticeable drop in the level of BTC dominance in the market.

Bitcoin’s share of total industry market capitalization is now below 50 percent – the lowest level in the past three years. During the previous bullish cycle, such a sharp drop resulted in the rapid growth of many altcoins, even in BTC trading pairs. Let’s talk about the situation in more detail.

By tradition, let’s start with an explanation. The term “altcison” means a massive increase in altcoin prices, which is happening at an incredible pace. At the same time, Bitcoin is either at the same price level, or it is getting cheaper. In fact, it is more profitable to keep altcoins during the altseason, because their rates increase much faster than the BTC indicators. And this is not surprising: amid the massive growth of alts, investors are selling bitcoins to open positions in other cryptocurrencies.

That is, here we have the opposite situation in comparison with what is usually happening on the market. Recall that during normal market conditions, a sharp rise in Bitcoin necessarily leads to a collapse of alts, because investors are selling the latter for the sake of BTC. However, the opposite is true during altcoin season.

The last time a full-fledged altseason took place at the end of 2017-beginning of 2018, when Bitcoin updated the previous historical maximum and rushed down. Under such conditions, it was unprofitable to keep BTC, so the sale of the first cryptocurrency and the purchase of alts followed. This forced the rates of the latter to increase sharply.

For clarity, here is a graph for the old Cardano project, which appeared on the Coingecko platform in October 2017. The ADA rate was then 2.68 cents, but already on January 4, 2018, the indicator reached a local maximum at $ 1.18.

This means that the cryptocurrency has grown 44 times in just a few weeks. It is this growth that is best characterized by altsison. And it may start soon, experts say.

When does altsison start?

After the IPO of the largest American cryptocurrency exchange Coinbase, the cost of Bitcoin began to decline sharply. However, the price of Ethereum, the sharp rise of which is considered by many to be the main marker of the “altcoin season”, on the contrary, began to rise. In particular, yesterday the rate set a new all-time high at $ 2,644.

Shortly thereafter, there was a collapse caused by the fall of Bitcoin, but in the end, ETH’s position still looks good.

According to the Coingecko platform, BTC’s market dominance rate hovers around 49.9 percent. This indicates space for altcoins to rise and a possible weakening of Bitcoin’s position. Yet, as history shows, it is at such moments that investors begin to switch to alts.

Firstly, BTC is no longer generating the same profitability as it was a few weeks ago. Secondly, the fees on the Bitcoin network are incredibly high, which makes the network inconvenient to use.

We already saw something similar on the market in mid-2017 and early 2018. Both of these periods are associated with the fall in BTC and the sharp rise in altcoins. With the dominance of the main cryptocurrency dropping below 50 percent for the first time in three years, we have every reason to believe that altcoins will be the best investment on the market in the coming weeks. However, do your own market analysis anyway.

At the same time, one altcoin Dogecoin decided not to wait for a new trend – the coin really became the hero of the first quarter of this year, showing the highest profitability on the market. At the same time, over the past couple of days, DOGE has seriously decreased in price, which prompts thoughts about the dubious prospects of this cryptocurrency. Yet it was originally created as a meme, and DOGE itself does not solve any real problems in the world. Therefore, you need to be careful with such investments.

We believe that the market situation really resembles what is happening in 2017. However, due to the growing popularity of Bitcoin as a means of payment – at least Tesla with its willingness to accept BTC for cars – it seems that the first cryptocurrency has not finished its growth. Perhaps, taking this into account, we will have more than one altsison in the coming months. Be that as it may, it is important not to forget about risk management and to invest responsibly.

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