• Bitcoin’s dominance by volume has decreased to its lowest level in years, while altcoin dominance has risen to its highest level since January 2021.
• According to an analyst from CryptoQuant, the current dominance by volume for bitcoin stands at 16%, while the altcoin market as a whole is at 64%.
• The analyst commented that past rallies led by altcoins have not typically lasted long, and that solid price rallies have only occurred when bitcoin’s dominance was higher than 50%.
The crypto market has seen a significant shift in dynamics over the past couple of years, with the dominance of altcoins on the rise and bitcoin’s dominance on the decline. According to recent on-chain data, altcoin volume dominance has reached its highest level since January 2021, while bitcoin’s dominance is at its lowest in years.
An analyst from CryptoQuant highlighted this trend in a recent post, noting that bitcoin’s dominance is currently sitting at just 16%, while the altcoin market as a whole is at 64%. The “dominance by volume” indicator measures the percentage of total crypto market trading volume that is being contributed by a specific coin. When the value of this metric increases for any cryptocurrency, it suggests that the coin is observing a higher amount of activity and interest from investors. Conversely, low values can imply that a crypto is losing support as its volume percentage decreases.
The chart posted by CryptoQuant shows the trend in dominance by volume for the entire altcoin sector (excluding ethereum) and for bitcoin over the past couple of years. It is clear that bitcoin’s dominance by volume has decreased sharply recently, reaching a value of just 16%, the lowest it has been in the past couple of years. On the other hand, the altcoin market has observed a significant increase in dominance, with a current value of 64%.
The analyst that brought this trend to light remarks it as “very concerning,” pointing out that in the past, rallies led by altcoins have not typically lasted long, becoming potential beartraps for investors. In contrast, solid price rallies have generally only started when bitcoin’s dominance was higher than 50%. This suggests that the current altcoin rally may not be sustainable in the long run, and that it may be a good time for investors to diversify their portfolios and hedge their positions.
It remains to be seen whether the current altcoin rally can be sustained and whether it will result in long-term gains for investors. For now, the data suggests that altcoins are outperforming bitcoin, but the future may be uncertain. Only time will tell if this trend is here to stay or if bitcoin will regain its dominance in the near future.