A recent decline in Bitcoin's dominance may indicate that an altcoin season is approaching sooner than many traders anticipate, according to one cryptocurrency analyst.
"The reason why you should have confidence in the altcoin price action is because the BTC Dominance chart looks bearish and has looked bearish for many weeks," crypto analyst Matthew Hyland stated in an X post on Friday.
Hyland elaborated, "The downtrend is favorable to continue; therefore, this relief rally has been a dead cat bounce in a downtrend." In a separate video released on Saturday, Hyland suggested that the recent volatility in Bitcoin's (BTC) price might have been influenced by traditional finance entities.
"Over the past month, I’ve kind of just maintained the view that a lot of this was really just manipulation, essentially for Wall Street to set themselves up," he claimed.
Bitcoin Dominance Declines 5% Since May
Bitcoin's dominance, which reflects its market share relative to the total cryptocurrency market, has decreased by 5.13% over the last six months. At the time of publication, it holds 59.90%, according to TradingView data.
On November 4th, Bitcoin experienced a drop below the $100,000 price level for the first time in four months, raising concerns across the broader market about its future price trajectory.
Currently, Bitcoin is trading at $102,090, as reported by CoinMarketCap.
While Hyland's analysis points towards potential momentum in the altcoin market, other indicators currently suggest a market that remains heavily centered around Bitcoin.
CoinMarketCap's Altcoin Season Index is currently positioned at 28 out of 100, which falls within the "Bitcoin Season" territory.
Potential Shifts in Altcoin Season Dynamics
The Altcoin Season Index last signaled "Altcoin Season" on October 8th, shortly after Bitcoin reached a new all-time high of $125,100. This period saw traders anticipating a rotation of capital into riskier assets further up the market cap.
However, the indicator rapidly shifted to a risk-off stance following the market crash on October 10th, which resulted in the liquidation of approximately $19 billion in leveraged positions across the cryptocurrency market.
Several executives in the cryptocurrency space anticipate that the upcoming altcoin season might exhibit a more selective and concentrated pattern compared to previous market cycles.
Maen Ftouni, CEO of CoinQuant, a firm specializing in algorithmic trading tools, recently commented that older cryptocurrencies, particularly those with or expected to receive an exchange-traded fund (ETF), are likely to attract a significant portion of the capital deployed during the next altcoin season.
"Not every single coin is going to have massive returns; the liquidity is going to be concentrated into certain places, dinosaurs being one of them, of course," Ftouni stated.