Bitcoin’s dominance in the cryptocurrency market has been steadily climbing, now reaching 58.8%, up significantly from 51% in December.
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This marks the highest level since early 2021. Bitcoin’s market dominance is measured by its market cap compared to the total market cap of all cryptocurrencies, and this rise has continued despite predictions of a potential “alt season.” Many investors were hoping for a shift in capital from Bitcoin to altcoins, anticipating an altcoin season when altcoins would outperform Bitcoin, often offering higher returns. Historically, these alt seasons have followed Bitcoin rallies, where traders sell some Bitcoin to invest in altcoins.
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Despite favorable conditions such as Bitcoin’s stability and increased institutional adoption, this expected rotation has yet to happen.
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Several key factors have contributed to Bitcoin’s sustained dominance. Corporate strategies, like those of Strategy, have focused on acquiring more Bitcoin, creating constant buying pressure. Additionally, the sheer number of new tokens in the market has led to a dilution of capital that might otherwise go to established altcoins. The introduction of spot Bitcoin ETFs has provided a direct route for traditional finance investments into Bitcoin, a route not available for most altcoins.
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The anticipated approval of Ethereum ETFs last summer was expected to reduce Bitcoin’s dominance, but the effect has been less impactful than many predicted. While Ethereum ETFs attracted notable inflows, they have not sparked the altcoin market to the extent that was expected. The idea of an alt season may not be completely dismissed but simply delayed, with potential triggers on the horizon that could prompt a shift toward altcoins.
Alexander Stefanov
