Bitcoin's dominance remains significant despite market volatility, currently at 61.6%, slightly below its February peak of 64.3%. This affects the altcoin season and interest in mid and low-cap tokens.
Shift Towards Mid or Low-Cap Altcoins
A detailed examination of the weekly top gainers shows that four out of the five are either mid or low-cap altcoins. This trend indicates that investors are moving away from large-cap coins and leaning towards cheaper, higher-risk alternatives.
Historically, Bitcoin dominance has been a crucial indicator for altcoin seasons. When BTC.D increases, it generally means that investors are moving their funds into Bitcoin for security. However, the current scenario feels different with higher associated risks.
Bitcoin’s Resilience and Altcoin Overload
The first quarter did not end as anticipated, with Bitcoin still below $100k, leaving many disappointed. Furthermore, no rate cuts are expected until at least the end of Q2, leaving the market in a state of anticipation. Despite these conditions, the altcoin season is yet to arrive.
Even with Bitcoin’s stability, the altcoin season index is currently at 29, indicating that 58% of altcoins are outperforming BTC. This percentage includes mainly low-to-mid cap coins, but it is still significantly below the 75% threshold generally required to initiate a true altcoin season.
End of the Altcoin Season?
As of March 18, CoinMarketCap listed over 12.88 million digital assets, a significant increase from 11 million in February. This surge, primarily from memecoins and low-cap tokens, is diluting investor focus.
While Bitcoin’s dominance continues to delay the altcoin season, investors are turning to high-risk alternatives. Numerous tokens now have market caps between $10,000 and $100,000, tying up capital in short-term assets. This situation is putting pressure on top high-cap coins. For example, the ETH/BTC pair has now dropped to a five-year low.
With the introduction of new tokens and the rise of ETFs, the market is undergoing significant changes. The typical capital flow from Bitcoin to altcoins seems to be fading, leaving Bitcoin with a firm grasp on the market.
