Bitcoin Market Dominance Analysis

Bitcoin market dominance is one of the most used indicators by crypto traders to analyze alt season and the crypto market in general. Remember the days when all these different altcoins went higher than 1000% within just 30-45 days? Yep, that is the kind of alt season that many whales and day traders are anticipating. However, will we ever see this type of craziness again? The answer is to look at the bitcoin market dominance chart and try to see the pattern.

 
BTC halving might also play a very important part to analyze when will we have the next altseason, as explained here.

BTC Was Very Dominant Until Q1 2017

Let’s take a look at the general BTC market dominance chart:

From this chart you can see that Bitcoin (the orange line) was dominating the crypto scene since before 2014 until Q1 2017. By February 2017, BTC controlled 86% of the market and only around 14% was shared among different altcoins. Prior to February 2017, the lowest BTC market dominance percentage was 76.42% in March 2016. 

However, things started to rapidly change from February 2017 to June 2017. At the time, Bitcoin market dominance fell very sharply from 86% to 37.84%. On the other hand, Ethereum was able to go as high as 31.17%. I still remember how many crypto enthusiasts started screaming “flippening” at the time. FYI, flippening means the event where Bitcoin eventually falls and is replaced by an altcoin in the crypto ranking by market cap.

However, this flippening never actually happened. Bitcoin suddenly regained its dominance in the crypto market until the peak of the bull market (December 2017).
The second wave of altseason happened after December 10, 2017 and it lasted until January 14, 2018, where BTC’s dominance percentage significantly fell from 62.80% to 32.81%. This was the period of time when many random altcoins went higher by more than 1000% within just a month. 

Since Q1 2018, BTC Has Been Very Strong

However, that honeymoon between crypto traders and altcoins did not last long. 2018 was known as the worst crypto year ever or as people say the “crypto winter”. Along with the fall of crypto prices, Bitcoin slowly regained its dominance once again in the market. Crypto prices eventually bounced back in 2019 and 2020, but Bitcoin has been able to maintain its dominance in the market without giving any chance for altcoins to repeat early 2017 and January 2018’s movements.

From the chart above, you can see that BTC (orange line) has been gaining its dominance against altcoins. At the time this post was written (May 3, 2020), Bitcoin was sitting comfortably at 65.74% crypto market dominance. 

What’s Going To Happen Now? How About The Next Altseason?

Here’s the thing about the crypto market. When there are enough traders believing in the same prophecy, they would buy or dump cryptocurrencies prematurely, and their action would actually fulfill their own prophecy. For example, if enough people predict that BTC halving would cause a price spike to $10,000 (such as how experts predicted it on this link) , then, they would buy Bitcoins 2-3 weeks before halving day. When enough traders cause the same upward pressure for BTC price, eventually BTC price would literally reach $10,000 - due to their actions in predicting the market. 

So, in regards to altseason, we can safely say it’s likely to happen again because crypto traders also expect and anticipate it the same way they anticipated January 2018’s altseason. That means, if enough traders believe that one-day alt season would eventually happen, they would buy altcoins prematurely, and their actions would be the one that causes upward pressure on altcoin prices.

The big question is, “When”? From the chart I showed you above, it looks like we might actually repeat this “altseason” when Bitcoin enjoys a new high. Just like the previous two altseasons, BTC market dominance usually fell after they hit a certain price point (such as breaking previous all-time high). 

In this case, I expect Ethereum and other altcoins to enjoy the rise in their market dominance once BTC can go as high as $19,000 or $20,000. Of course, just like everybody else, my prediction can easily be wrong. In fact, we don’t even know if BTC can ever go to that level again. As always, trade cautiously and use tight risk management. This prediction is not your financial advice. Just a trader trying to analyze the market like everybody else. Trust your own judgements!