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Bitcoin Dominance Soars: Altcoin Market Impact

Bitcoin Dominance Soars: Altcoin Market Impact

Market Analysis

The cryptocurrency market experienced a significant shakeup, with $2.18 billion in liquidations over the past 24 hours—the largest single-day liquidation event on record. While Bitcoin (BTC) saw $409 million in liquidations, the altcoin market suffered a considerably harsher blow.

Bitcoin's Rising Dominance: A Threat to Altcoins?

This downturn is evidenced by both price action and the rapid increase in Bitcoin dominance (BTC.D), which recently surpassed 60%. This surge signifies either a relative strengthening of Bitcoin or a weakening of the altcoin market. The BTC.D exceeding the 60% resistance zone is historically bearish for altcoins. However, stablecoin metrics offer a glimmer of hope.

While the immediate focus is on market recovery, analyzing market indicators provides context for what traders and investors can expect in the coming months, and the possibility of an altseason.

Analyzing Market Indicators

  • Bitcoin Dominance (BTC.D): The chart shows rejections from the 60% resistance zone in 2018 and 2019, during bear markets. A retest in a (presumed) bull market, with no major bull peak indicators flashing, is cause for concern. Technically, BTC.D could rise further to 63.84% and even 72.5%, potentially favoring Bitcoin over altcoins.
  • Stablecoin Exchange Reserves: The growing amount of Tether (USDT) in exchange reserves indicates potential buying power. However, the impact of the recent massive liquidations might delay any significant bullish activity.

It's important to note that Bitcoin hasn't yet broken below the two-month low of $92,000. While positive USDT net flows, particularly in November, suggest buying pressure, this momentum has slowed since December.

The Future: Altseason or Bitcoin's Continued Reign?

Later in the cycle, closer to a potential market peak, an altcoin season could emerge, characterized by a sharp drop in BTC.D and significant gains across altcoins. However, the sheer number of altcoins could prevent a widespread surge, potentially favoring established, valuable projects.

Investors must be prepared for both scenarios. Codeum, a leading blockchain security and development platform, offers services such as smart contract audits, KYC verification, custom smart contract and DApp development, tokenomics and security consultation, and partnerships with launchpads and crypto agencies to help navigate this complex market landscape.

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