Altcoin Season Begins? BTC Dominance Fades But Crypto Market Grows $210B

  Insights:

• Bitcoin Dominance (BTC.D) hit a 2-year peak of 55% on December 4, but has entered a steep downtrend since then, signaling that investors are now channeling funds toward altcoins and memecoins.  
• The global cryptocurrency market cap grew by $210 billion between Dec 4 and press time on Dec 9, while BTC.D shrank by 3%.
• The TOTAL3 Chart shows that the altcoins have attracted $64 billion in capital inflows in December alone, signaling the start of the much-anticipated altcoin season. 

Bitcoin Dominance (BTC.D) hit a 2-year peak of 55% on December 4, but has entered a steep downtrend since then, signaling that investors are redirecting funds to the altcoin market to diversify their portfolio and amplify gains. 

Has this kickstarted the much-anticipated altcoin season? 

What is Altcoin Season? 

Altcoin season is a popular crypto terminology that references a phase in a market boom cycle when alternative cryptocurrencies (altcoins) are outperforming Bitcoin (BTC) and Ethreum (ETH)

Historical trends have illustrated that crypto boom cycles often begin with captial first flowing into the BTC and ETH. But when the market bounce gains momentum and evolves into a full-blown bull rally, investors begin to reallocate capital toward lower cap altcoins and memecoins. 

Crypto investors often switch focus to altcoins (every other cryptocurrency outside of BTC and ETH) during a market rally for two main reasons: to diversify their portfolio, and to amplify their gains.  

As the current crypto market rally stretches into its third consecutive month strategic investors have started looking out for signals to determine if the altcoin season started. 

Altcoin Season Kicks off With Bitcoin Dominance Fading 3% This Week

Altcoin season appeers to have kicked off, based on some of the critical on-chain data trends observed this week.  Bitcoin Dominance (BTC.D) is a major indicator that have offer some early clues that the altcoin season has kicked off. 

BTC.D represents Bitcoin’s market dominance, i.e the share of the total cryptocurrency market capitalization that accrues to BTC. 

While BTC price rally cooled this week, popular altcoins like Solana (SOL), Avalanche (AVAX) and Dogecoin (DOGE) all accelerated into double-digit gains. In effect, BTC.D has witnessed a noticeable decline this week. 

As Bitcoin dominated the crypto market rally since mid-October, the chart below illustrates how BTC.D raced to 55.12% on Sunday Dec 3. the highest since April 2021. But this week, altcoins have gained ground, while Bitcoin price consolidated. Hence, BTC.D sharply declined by 3% between Dec3 and Dec 10., 

The Bitcoin Dominance (BTC.D) indicator is a vital metric that investors can use to track the shift in market momentum towards altcoins. 

When BTC.D begins to trend downward (as seen in the blue trend line above), while the total crypto market cap increases, it means that altcoins have started gaining a larger market share over the past week. 

If this phenomenon persists, some of the top mega-cap altcoins will like breakout to new peaks as investor channel billions in to the markets. 

Global Crypto Market Cap Grew by $210 Billion Despite BTC.D Shrinking

The growth in cryptocurrency market valuation this week, also provides another layer of confirmation that the altcoin season has kicked off.  

Since the rally began around  October 10, the total crypto market valuation has grown by $590 billon. However, Bitcoin alone accounted for $333 billion, or 56% of all the capital that flowed into the crypto market during that period. 

However, the market momentum appears to have tilted towards altcoins. This week, the total crypto market cap grew by $210 billion. Only $85 billion (40%) of that went to Bitcoin, while the remaining $125 billion was invested in the altcoin markets. 

The TOTAL3 Chart, which accounts for the total crypto market capitalization excluding Bitcoin (BTC) and Ethreum (ETH).

As seen above, altcoins attracted more than $64 billion in capital inflows over the past week. This further affirms the stance that altcoin that crypto investors are now alloctating 60% of the capital toward altcoins. 

Hence, if Bitcoin Dominance (BTC.D) continues to shrink while the global market cap rises, the altcoin season could enter full-swing in the weeks ahead.