The Dominance of Bitcoin Could Drop to 40%, Why This is Good for Ethereum and Altcoin

Bitcoin's dominance in the crypto market is dangerously approaching the long term resistance level that has caused significant reversals in the past. This resistance level is marked on the weekly BTC.D candlestick chart. Each time the dominance touches this descending trend line, it will struggle to break through and ultimately plunge. Notably, Bitcoin's dominance is currently returning around this resistance level and the technical outlook posted on the TradingView platform indicates a collapse down to 40% in the coming months. Bitcoin's dominance may drop to 40%: Good for the Altcoin market The driving force behind Bitcoin's dominance has been different in this cycle compared to previous cycles. This is because dominance has increased significantly since the beginning of this cycle, leaving little room for an altcoin season as many have anticipated. At the time of writing, Bitcoin's market dominance is at its highest level of the year at 63.2%, according to data from CoinMarketCap. However, an interesting technical analysis shows that Bitcoin's dominance is currently approaching the resistance trend line, putting it at risk of dropping below 40%, down to 34.9%. If that pattern holds true once again, the crypto market may be heading towards a phase where Ethereum, XRP, and other altcoins regain strength in what many hope will be the next altcoin season. The decrease in Bitcoin's dominance will be a positive sign for altcoins, as it indicates that the altcoin market is outperforming Bitcoin. This will be characterized by widespread price increases of major altcoins, such as Ethereum, Solana, and XRP. In such cases, tokens like Ethereum, XRP, Cardano, Chainlink, BNB, and Litecoin, known as DINO coins that have survived through multiple market cycles, are likely to attract early attention from retail traders.

However, unlike previous price increases when only a few hundred altcoins existed and most received attention, the crypto market is now saturated with thousands of altcoins. After the large market cap altcoins, the rotation may shift to more niche areas. Fields such as Artificial Intelligence (AI), Real World Assets (RWA), and DeFi may also attract attention, but even in these categories, a strong filtering process will be applied to select the better-performing altcoins. Can Bitcoin's dominance really drop to 40%? The dominance of Bitcoin dropping to 40% is not a new phenomenon, when looking at the trends of the bull market in 2017 and 2021. However, such a phenomenon happening again is becoming increasingly difficult, considering Bitcoin's position in today's investment world through spot Bitcoin ETFs. These funds in these ETFs are locked for a long term, meaning that the rejection of BTC's dominance may not automatically lead to a large liquidity flow into the altcoin market, as seen in 2021 and 2017. Even when Bitcoin's dominance drops to 40% and opens a new altcoin cycle, many altcoins will ultimately end up with a brutal decline. In previous market cycles, the majority of altcoins suffered losses of over 90% as bullish sentiment waned and capital flowed back into stablecoins.