As Bitcoin (BTC) nears $70,000, its dominance in the broader cryptocurrency market has surged to a cyclical high of 58.9%.

Bitcoin’s dominance is growing, are altcoins in trouble?

Bitcoin Dominance (BTC.D), an indicator measuring the portion of the total cryptocurrency market capitalization that is managed by the leading digital asset, has hit recent peak in the cycle at 58.9%. The last time the cryptocurrency market witnessed this level of BTC.D was in April 2021.

After falling slightly following Iran’s attack on Israel earlier this month, Bitcoin rose almost 10% last week to trade at $67,769 at the time of writing.

At the same time, the total market capitalization of cryptocurrencies increased from $2.26 trillion on October 8 to $2.41 trillion on October 16, according to data from CoinGecko. However, the enhance in the total market capitalization of cryptocurrencies is largely driven by the enhance in the price of BTC.

At the beginning of October, BTC.D was hovering around 57.1%. Since then, it has increased by approximately 1.8%, which shows Bitcoin’s sturdy performance compared to altcoins such as Ethereum (ETH), Solana (SOL), Binance Coin (BNB), and others.

The current level of BTC.D calls into question the prospects of the long-awaited “altseason”, usually characterized by parabolic increases in altcoin prices and declines in BTC.D. Notably, BTC.D peaked at 70% during the post-Covid-19 bull market in 2020-21, before falling to 40% by mid-2021.

In behind schedule 2022, BTC.D hit a low of around 39% amid the collapse of FTX, which halted operations due to fraud allegations made against its management. Since then, the price of BTC.D has been gradually increasing, as can be seen in the chart below.

The ETH/BTC ratio needs to recover within a potential alternate season

As BTC.D continues to rise, it is significant to consider the ETH/BTC trading pair. For the uninitiated, the ETH/BTC trading pair – commonly referred to as the ETH/BTC ratio – tracks the performance of Ethereum (ETH) relative to BTC.

At press time, the ETH/BTC trading pair is at 0.0385, a level last seen in April 2021. The chart below shows that Ethereum has failed to make a higher high against Bitcoin since at least November 2022, reflecting tender ETH price action over the last two years.

ETH’s sturdy performance against BTC often precedes the alt season, but there are no clear signs of a significant trend reversal.

Moreover, the total value locked (TVL) in decentralized finance (DeFi) protocols across blockchains has he slid down from almost $110 billion in June 2024 to $88 billion, indicating tender demand for altcoins among cryptocurrency investors.

However, some cryptocurrency analysts and technical indicators continue to suggest that a potential alt season could be on the horizon.

For example, earlier this month, altcoin market cap exceeded its 200-day exponential moving average (EMA), a key resistance level that signals altcoins’ sturdy performance in recent days.

Likewise Steno Research recently he noticed that ETH is set to make a comeback after the Federal Reserve (Fed) cuts interest rates. At press time, BTC is trading at $67,769, up 2.5% in the last 24 hours.

Featured image from Unsplash, charts from Tradingview.com