Bitcoin dominance has not only broken down from a two-year-long uptrend, but it has also retested the trend line as resistance and failed to reclaim the key level.
With trend line support now confirmed as resistance, its likely that Bitcoin dominance could see an extended downtrend in the days, weeks, and months ahead. But what does this mean for altcoins and the rest of the cryptocurrency market?
Bitcoin Dominates Cryptocurrency Market With Over 65% Share Currently
Bitcoin dominance is a metric that weighs Bitcoin’s market cap against the rest of the cryptocurrency landscape.
As the first-ever cryptocurrency, Bitcoin enjoys a first-mover advantage, brand power, and the most institutional interest and financial world support compared to the rest of the crypto market.
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This has helped Bitcoin’s market cap grow massively in relation to the rest of the thousands of altcoins making up the industry.
Prior to 2017, Bitcoin dominance had never fallen below 94%. It was that year and the hype bubble that sent BTC dominance is a brutal downtrend, falling to as low as 35% dominance.
But as the bubble popped, and the irrational speculative valuations of these untested altcoins fell by 99% or more in most cases. Even the strongest altcoins like Ethereum or Ripple fell by over 90%
It resulted in an uptrend forming in both Bitcoin and BTC dominance, bringing the metric to a peak of 73% during the last two years.
The uptrend support line, however, was finally breached in February 2020 during the massive altcoin market breakout, supported by historic trading volume.
BTC Dominance Dropping Could Lead to Massive Altcoin Season
BTC dominance has since retested the two-year-long uptrend line and confirmed it as support turned resistance.
With a bearish retest confirmed, further downside in BTC dominance is probable. And when Bitcoin dominance drops, it is time for altcoins to shine.
When altcoins outperform Bitcoin, crypto analysts and traders refer to this as an altcoin season. However, its been since before 2018 and long before most crypto investors bought in at the top of the bubble since such an alt season has occurred.
Crypto investors and traders may not know what to expect from altcoins when dominance breaks down. The last major breakdown resulted in BTC dominance falling from 95% to just 35%.
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A similar, 60% move down from the recent peak of 73% dominance, would mean Bitcoin has just 13% market share at the end of the next downtrend. A move like that would mean that altcoins have taken over the crypto market in a major way, and Bitcoin will be left at risk of falling out of its leadership position for the first time ever.
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