Most people invest in the cryptocurrency market trying to catch a bull-run, where prices can go up up to 10x (or more) and potentially increase their portfolio size. Bitcoin is currently the highest market cap cryptocurrency and the least aggressive when it comes to price fluctuation, as it is harder to drop (or pump) an asset that size. For this reason, investors focus on altcoins that have a lower market cap and can make bigger gains than Bitcoin during a bullish rally.
In case you were wondering what Bitcoin dominance is, we will explain how capital goes from one side of the market to the other and how altseasons work.
What is Bitcoin dominance?
Bitcoin dominance is the ratio existing between the market cap of Bitcoin compared to other cryptocurrency assets. In a short example: Let’s say the whole cryptocurrency market has a market cap of 100 billion USD. If Bitcoin were to have a $70 billion market cap, that would mean Bitcoin has a 70% dominance on the whole market.
Having a dominance this high means that some assets are going to lose value against BTC as its price goes up and the other side of the market will be outperformed. However, Bitcoin dominance moves cyclically, so there is a point where investors take their profits from BTC and get into altcoins that have not yet started a strong, bullish movement.
In this scenario, Bitcoin will be outperformed as other assets move up in a big % ratio. The lower a crypto market cap is, the more volatile the asset will be.
Altseason Explained
As we know, altcoins are alternative cryptocurrency projects to Bitcoin that have been increasingly appearing throughout the recent years. In the start, Bitcoin was basically all there was until Ethereum, NFTs and DeFi, so we’re at a stage where there is still a lot of exponential growth to witness. Altseason is a period in the crypto market where altcoins will outperform Bitcoin and gain value during a bullish rally.
This phenomenom affects especially the trending altcoins and can lead them to new all-time highs. It should also be noted that Bitcoin can still go up as altcoins rally, while some altcoins will drop in the case of a Bitcoin price fall.
| Bitcoin Dominance | BTC | Altcoins |
| Increases | Increases | Decreases |
| Increases | Decreases | Decreases HARD (DIP) |
| Increases | Stable | Accumulation phase |
| Decreases | Increases | Pumps HARD (Altseason) |
| Decreases | Decreases | Stable |
| Decreases | Stable | Increases |
When is the right time to enter an Altseason?
These price movements can be influenced by upcoming news and random events as long as the right conditions are met both for Bitcoin and altcoins. Usually, the best time to consider investing in altcoins is after Bitcoin already marked bullish patterns and starts losing dominance inside the market.
Bitcoin dominance still sets up the biggest bullish or bearish scenarios inside the crypto market, although it is likely that this ratio will be closing in time as new protocols emerge and the ones that already exist find new uses. In any case, it is still early for crypto and there are -without a doubt- a lot of changes to come for this market.