With Bitcoin’s hyperbolic year, is it too early to be talking about altcoin dominance again? After all, this may be a fast-paced industry, but it’s only been a few days since the BTC price took a tumble – and less than a week since everyone was talking about Bitcoin’s dominance.
Bitcoin’s price might have briefly dipped below $10,000 this week, but Bitcoin dominance was still over 66% a few days ago. That’s because Bitcoin wasn’t the only cryptocurrency to see its price go down. Ethereum, Litecoin, Bitcoin Cash, and most major cryptocurrencies also followed the trend.
Moreover, they have all been underperforming against Bitcoin this year. So, what should we expect from altcoins right now?
What’s all the talk about altcoin dominance?
In the beginning, there was Bitcoin, and Bitcoin only. Then the cryptocurrency market evolved and new digital coins entered the scene. They were given the name ‘altcoins’, meaning any alternative cryptocurrency that isn’t Bitcoin.
Many of these digital coins are newer versions of cryptocurrency that try to overcome Bitcoin’s ‘limitations’. However, so far, none of these features or innovative blockchain solutions can surpass Bitcoin’s popularity in the crypto world.
Despite having thousands of cryptocurrencies in the market today, trading is still dominated by Bitcoin. The world’s first cryptocurrency currently has a market cap of $188 billion, counting for a huge majority of the entire market cap of $286 billion.
From time to time, altcoins go on a tear and gain some significant market cap. This is called an altcoin season, which is far more accurate than altcoin dominance. That’s because even during peak seasons for altcoins, with few exceptions, Bitcoin has always managed to keep over 51% of the crypto market.
— Paddy stash (@paddystash) July 13, 2019
According to the trader, an altcoin season will happen soon. But what does this mean for cryptocurrency traders? Altcoins could gain market share against Bitcoin, which would automatically reduce BTC dominance in the market. This scenario would make traders, analysts, and investors more interested in altcoins again.
The market handled similar rumours about a possible altcoin season four months ago. Back in March, these predictions were based on Google trends. This time, the forecasts seem to be more accurate. Even John McAfee seems to share in the opinion that an altcoin season is coming.
Bitcoin cranking up, but the real winners, beginning soon, pwill be the alt coins 10x + the rise in Bitcoin. Top of the heap will be the ones most beaten down in the Bear Market – Docademic, Apollo, XTZ, etc. This is where the real money is to be made. Fill your bags folks. pic.twitter.com/Mgh8KVd4M2
— John McAfee (@officialmcafee) June 26, 2019
Why altcoin season matters
So why should you care about altcoin dominance? Mostly because it allows you to make some extra money.
Like it or not, significant trends in cryptocurrency depend on Bitcoin and its price. Generally, no cryptocurrency gains value when Bitcoin is either bearish or extremely bullish. When BTC price goes down, it usually drags all cryptocurrencies with it. When the most popular cryptocurrency gains value, alternative markets usually catch up after a while.
However, during altcoin seasons, cryptocurrencies gain value regardless of the evolution of Bitcoin. These are short periods that can become lucrative opportunities for investors. What some traders do is make money from these price fluctuations and then use the funds to increase their Bitcoin holdings.
It’s a way of seeing a good return from trading cryptocurrencies by speculating on the price.
What altcoin dominance means for Bitcoin
New research from Binance shows that Bitcoin has registered weak altcoin correlations lately as a result of its dominance in the crypto market. So, a possible altcoin season shouldn’t have a significant influence on BTC price in the long run.
Moreover, Bitcoin may be a volatile asset, but it’s still the investors’ favourite. Part of Bitcoin’s popularity comes from the fact that it isn’t considered a security and has at least an amber light where most regulatory bodies are concerned. This gains the trust of institutions. Even if altcoins like Ethereum and EOS are gearing up for a bull run in the near future, they still can’t compete “on equal terms” with Bitcoin.
Everybody is talking about altcoin dominance because a handful of people believe an altcoin season is close. Despite voices in the community who speak about Bitcoin dominance and cash flowing into BTC, crypto bulls like John McAfee are encouraging people to invest in altcoins.
The cryptocurrency market is exceptionally hard to predict, and anything can happen. A diversified portfolio (which includes altcoins) could be an effective way of spreading some of the risk associated with the volatility of digital assets.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.