- Bitcoin’s dominance spiked 14% in 18 days during 2020, drawing liquidity from altcoins.
- Historical patterns suggest a potential decrease in Bitcoin dominance could trigger another altcoin rally.
- Investors are cautiously watching for signs of Bitcoin liquidity shifting, which could signal the start of a new altcoin season.
Season of many new alt coins could be around the corner as the Bitcoin dominance index dramatically changes again. Real-world data from 2020 indicates that a steep ascent of Bitcoin dominance could be quickly corrected but this will spur new action and possibly even the altcoins market. In 2020, when bitcoin made the second attempt at an ATH, the bitcoin dominance rate jumped by 14% in only 18 days and sucked liquidity from altcoins during that time.
Bitcoin’s Dominance and How It Affects Other Coins
An interesting concept central to the understanding of the nature of Bitcoins and the market, is the Bitcoin Dominance ratio that grows when traders and investors move their attention to Bitcoin and from Altcoins.
It was observed even with previous cycles of a bull run in which buyers deposited money to Bitcoin after the hitting of certain price markers which eased interest in smaller cryptocurrencies. Post ATH dominance rise in late 2020 drew liquidity away from altcoins, however, after four months, the situation was to repeat the opposite, taking the alt market high once more.
Expectation for the Cycle of 2020 to Recur
Experts are already comparing the structure of the market to what one saw in the previous year, 2020. The pattern indicates that the increase in Bitcoin’s dominance, which depends on the growth of Bitcoin price, may again be accompanied by a decline. If the same pattern is observed then we are likely to see the next alt coin season as the dominance of Bitcoin will eventually decrease.
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The attitudes remain cautious as investors and traders wait for more chances of shifting bitcoin liquidity. The trend in the market in 2020 could repeat itself: Bitcoin dominance will decrease soon, which will help altcoins to grow. Despite this, the coming months may bring chances to return to space again that may potentially mean the beginning of the new season of altcoins.
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