Bitcoin has been on a winning streak over the last week with its price rising above $31,000 once more and this recovery has seen its market dominance climb rapidly. As the digital asset currently sits just above $30,000, its market dominance has remained above 50% and while this is good for Bitcoin, the implications for altcoins in the space could be greater.
Bitcoin Dominance Returns To 2021 Levels
Bitcoin’s dominance has risen to its highest level in the past two years. The dominance which had rapidly declined in 2021 rose back quickly between March and June to hit a local high of around 52% dominance for the first time since April 2021.
This rise in dominance reflects the fact that most of the market rally has been limited to just Bitcoin, despite altcoins seeing some upside. As a result, the market cap of BTC has crossed $587 billion, meaning that the digital asset’s market cap accounts for more than half of the total crypto market cap.
However, Bitcoin’s rise in dominance doesn’t just point to a bullish trend for itself alone but for altcoins as well. This fact comes from historical performances when BTC’s dominance has risen sharply. And while BTC could continue to see further increases in price, altcoin could take the lead from here.
Altcoins Could Shine As BTC Dominance Rises
Historically, when Bitcoin dominance has risen to account for the majority of the crypto market, it has often signaled the start of the altcoin season. This is because investors begin to rotate their profits out of BTC as they believe the digital asset would not move up further. These profits then make their way into altcoins, increasing the demand for altcoins and causing their prices to rise.
The same was the case back in 2020 just at the start of the bull market when the dominance had risen above 50% following an incredibly slow 2019. What followed was an increased interest in altcoins as they bottomed out in early 2020, leaving room for the massive rallies that were experienced in 2021.
If this market sticks to previous trends, then it is possible that the market dominance of Bitcoin will continue to rise. However, it will then witness a sharp drop as investors move into altcoins for higher gains, causing the market caps of Ethereum and others in the space to surge.
An altcoin season from current market prices could see the coins rise another 10% at the very least. Such a rally would put the price of Ethereum above $2,000, a recovery that would be a welcome development for the crypto market.