In the past 20 days, Bitcoin (BTC) has lost 4% of its market dominance, triggering what could be the start of an altcoin season. This shift indicates that other major cryptocurrencies are outperforming Bitcoin, attracting investment and potentially leading to rallies known as altcoin seasons.
Cryptocurrency investors often move part of their profits to altcoins, seeking to capitalize on high volatility and initiate an altcoin season. The Bitcoin Dominance Index (BTC.D) is a key indicator signaling such a season, calculated by dividing Bitcoin’s market value by the total market capitalization. A decline in BTC.D suggests investors are diverting capital from Bitcoin to other cryptocurrencies.
At the time of writing, the index had fallen to 51.43% from a November low of 51.82%, marking the lowest level since October 16. This could be a turning point, following a peak of 55.35% on December 7. Additionally, the total crypto market excluding Bitcoin reached a multi-year high market capitalization of $796.955 billion.
The index has seen a 55.57% increase since October 16, adding $283.564 billion in value. At the beginning of 2023, the market value of all cryptocurrencies excluding BTC was $468 billion, indicating a 70% increase. Leading the altcoin season, Solana (SOL) has witnessed an impressive 1,072% price increase since the start of the year, overtaking BNB Chain (BNB) and other DeFi competitors.
Bitcoin Cash (BCH) could be seen as a catalyst for the decline in Bitcoin’s dominance. Alternatives like Elon Musk’s AI Grok’s mention of a low limit for valid payments in X are also gaining attention. However, it’s crucial to understand that altcoins have lower liquidity and higher volatility, exposing investors to greater risks, hence caution is advised when investing in altcoins.