Recent market dynamics are seeing shifts in Bitcoin dominance and overall market liquidity. Experts indicate a potential capital rotation from Bitcoin to altcoins in the near future.
Bitcoin Dominance and Economic Liquidity
Bitcoin dominance (BTC.d) is at 63.87%, nearing the upper boundary of a long-term trendline. Meanwhile, data on the Federal Reserve’s total assets suggests a liquidity low, possibly hinting at an impending altcoin rally. Historical patterns show that BTC dominance peaks align with Fed balance sheet lows.
Golden Cross Forms and Trendline Breakout
Recently, Bitcoin’s daily chart experienced a trendline breakout coinciding with the formation of a Golden Cross. While not a direct buy signal, this crossover indicates a shift in short-term momentum. Currently, price action is ranging between $82,000 and $85,000, with the Kumo Cloud presenting resistance between $85,000 and $90,000.
Conditions for Altcoin Season
Bitcoin has failed to decisively break above the resistance trendline, which may lead to a drop in dominance below 40%. Such a scenario could prompt a significant liquidity influx into altcoins, mirroring past altcoin seasons.
As we observe the current market trends, analysts conclude that movements regarding Bitcoin dominance and liquidity could greatly influence altcoins in the coming year, making this period particularly compelling for investors.
