Bitcoin Dominance Dilemma – Why Capital Flows Back To BTC Before Fuelling Altcoin Rally

THE cryptocurrency The market, a landscape famous for its volatility and rapid innovation, operates at a pace dictated by Bitcoin’s dominance and subsequent altcoin explosion. This pattern is proof that the market is still moving at the pace of BTC, positioning it as the invisible conductor of this vast digital sector.

How Bitcoin Dominance Peaks Before Altcoin Euphoria

In an X sendSwissblock stated that the Bitcoin and Altcoin cycle continues to indicate that the cryptocurrency market remains firmly anchored in BTC dominance. Despite increasing narratives and market behavior, the market is now approaching BTC’s full seasonal zone, a phase where capital seeks safety and structure within BTC.

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However, this cycle has an interesting nuance in that dominance is not increasing as expected, but is stabilizing, suggesting the first signs of readiness for rotation. BTC still drives the narrative, attracting attention and trust, but the dominance curve appears to be stabilizing.

If BTC can maintain its stability as altcoin pulses broaden, the market could soon evolve from a BTC-led phase to a mixed regime, a phase in which altcoin leadership will begin to re-emerge.

Leading full-time cryptocurrency trader and investor, Daan Crypto Trades, also has lately offered a key technical perspective on the current state of the cryptocurrency market, Bitcoin Dominance, and its implications for a potential breakout of the all-time high (ATH).

Bitcoin
Source: Swissblock chart on X

According to Daan’s analysis, BTC has consistently outperformed altcoins in recent weeks, a dynamic he sees as healthy and necessary for the broader market. As BTC’s dominance increases, capital and attention consolidate around BTC, bolstering confidence and creating the conditions needed for a compelling pivot to ATH.

The analyst noted that this phase of BTC strength could extend further, potentially pushing BTC dominance up to 60% sooner altcoins start recovering again. He believes this dominance rally may be a bounce within a broader downtrend on the BTC dominance chart. Despite the change, Daan maintains a balanced approach, maintaining a 50/50 split portfolio BTC and ETH altcoin spot positions, a strategy he has maintained for some time.

Why Bitcoin’s strength still matters

As Bitcoin’s dominance is on the rise, Koroush AK, founder of ZCTraders, highlighted that as long as BTC price holds above the 0.382 Fibonacci retracement level around $119,400, altcoins will not enter panic mode. Additionally, the broader market will continue to position itself for potential breakouts to all-time highs.

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However, BTC could suffer a short-term withdrawal towards the midpoint at around $116,000. Therefore, if BTC remains resilient above current support, an extension towards $125,000 could trigger a sharp breakout to new highs, reaffirming the bullish structure of the market. Koroush also addresses the psychology behind this type of trading approach, which is that a disciplined trader must always prepare for two scenarios when trading.

Bitcoin
BTC traded at $121,501 on 1D chart | Source: BTCUSDT on Tradingview.com

Featured image from Pixabay, chart from Tradingview.com

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