Cornel

“Altcoins Will Never Rise Again!” A long thread is coming up about BTC dominance, “old money” / “new money“ in crypto, market trends, rules to follow in alt season, and most importantly, when the next alt season will start. 🔍 It’s clear that there’s a lot of frustration floating in the crypto market at the moment. BTC has been rising non-stop for a few weeks, hitting ATH after ATH, and yet, ETH is at an all-time low vs. BTC, along with most altcoins. There’s a very clear cause for this phenomenon. In every bear market, enthusiasm disappears from the market, and old money gradually pulls out of altcoins and moves into BTC because they know BTC leads any rally in the first phase of the bull market. Now that we understand this phenomenon, let’s look at the first two conditions that must be met for old money to move back into altcoins: 1. BTC must consolidate on a long-term upward trend. ✅ 2. These investors need to make enough profits from BTC to take on additional risks. Remember, old money is the first to set the tone for an alt season, and new money follows. ⏳ At the end, I will share my strategy for this alt season and what to watch out for in the coming period. Key Takeaways - We may have already reached the top of BTC dominance, or we might have just a few weeks left until alt season. - We will have confirmation once dominance falls below 57.5%. - Bitcoin is in price discovery, which favors the beginning of a downward trend in dominance. - With mid and small-cap coins representing only 9% of the market, any capital shifting from BTC to altcoins will have a disproportionately large effect on their value. This is a critical segment to watch for growth during alt season. 👇 1. DOMINANCE BTC dominance (#BTC.D) has increased in the last two years from 40% to 60%. In simple terms, this means that bitcoin now represents 60% of the entire crypto market’s value. And the fact that dominance hasn’t dropped yet is the ultimate argument that we haven’t seen the final stage of this bull market, and we still have many months of growth ahead, even if BTC has hit the 100k level. Dominance decreases aggressively in the last 6-12 months of a bull market, as new projects with new narratives appear and start to “steal” BTC’s market share. Those who make profits from bitcoin, at some point, want to take more risks to increase their BTC holdings by moving money into mid and large-cap alts. They are joined by “Average Joe” (i.e., new money), who thinks BTC is already “too expensive” to invest in, so he will throw his money into small-cap alts (“high risk - high reward coins”). This also explains the explosion of the memecoin sector, where all the new money has entered over the last year. But a lot of new money hasn’t yet entered the market. If you have the patience to read the article to the end, I will tell you exactly when this massive capital transfer to alts will occur. Keep in mind that each 1% drop in dominance currently means about $30 billion moving into altcoins. A huge figure! 💥 To put these numbers in perspective, consider that the market cap of the coins ranked in the last 30 positions on CoinMarketCap (CMC) is around $30 billion, meaning a simple 1% dominance transfer to these coins could double their value overnight. 2. HISTORICAL EVOLUTION If we carefully analyze past patterns, we see that dominance begins its accelerated decline only around the time BTC’s price enters price discovery (i.e., when it surpasses its previous ATH). In the 2017 cycle, dominance began its aggressive decline 7 weeks before this event, and in 2020, the dominance decline started 3 weeks after the price surpassed the previous ATH. Currently, we are in the 3rd week of BTC’s price discovery, and according to the pattern, it’s possible that the top of dominance has already been reached, or it could take just a few more weeks to reach it. 🗓️ 3. THE LAST BARRIER Like any top level, this one is very difficult to anticipate. Therefore, we are not interested in predicting the exact top but in seeing a change in the trend’s direction. Watch for dominance to fall below the green trend line on the chart below for a few days; from that moment, it will be the safest time to enter #altcoins ! Right now, that would mean a value below 57.5%. This is the final confirmation that dominance will start a long period of decline, translating into gains for alts. 4. The Self-Fulfilling Prophecy Applying classic analysis indicators like Fibonacci retracement on dominance is mostly wishful thinking, but it can have some impact on traders’ collective psychology. In technical analysis, the 0.618 Fibonacci level is an extremely relevant resistance/support level. Dominance has just reached this level, and this means that if it drops below the trend line mentioned earlier, the 0.618 level will be interpreted by traders as a possible top, giving them much more confidence to invest in alts from that moment. 5. OTHERS.D Now, I will show you a chart that provides even more confluence to the data I’ve presented so far. It’s about OTHERS.D, a chart that tells the story of all the coins outside the top 10 CMC (CoinMarketCap). This chart reflects the dominance of mid-cap and small-cap cryptocurrencies, exactly those coins where most of you have, or plan to invest, the majority of your money. Believe it or not, this segment currently represents only 9% of the entire market. Now, perhaps many of you better understand why I mentioned earlier that a 1% transfer from BTC dominance to altcoins could have a huge impact on the price of most alts. In this 9% segment, there are tens of thousands of coins listed on CMC. The chart below shows how, every time OTHERS.D dominance hits that yellow trendline, it rebounds aggressively upwards. Is it safe to say that there’s a very high chance it will happen again this time? I think so. I expect this to have been the bottom for OTHERS.D. Another reason to believe that bitcoin dominance is very close to its top level for this cycle. 6. ALTCOIN SEASON INDEX Are we in #altcoinseason? The short answer is NO. ❌ Both the CMC index and the BlockchainCenter index indicate the same thing. It looks like we’ve just exited the bitcoin season and are quickly heading toward an alt season. 7. NEW MONEY A significant portion of the new money will bypass BTC. 💸 It will mostly enter the #OTHERS.D segment, which will further fuel the growth of mid-cap and small-cap alts. The total amount of circulating stablecoins ($176.2B) just surpassed the previous ATH from the last cycle a few days ago, and from now on, I expect new money to enter the market at a much faster pace. 8. HOW TO PREPARE FOR ALT SEASON How To Pre • Get rid of old projects in your long-term portfolio. Over 90% of them will not reach or surpass their previous ATH (I’ll explain why in another post). 📈 • Invest in segments and narratives that are trending now. The crypto market is highly emotional and very responsive to new trends. Only the coins in the right segment will achieve massive gains this cycle (Layer 2 solutions or bitcoin ecosystem coins are just a few I’m watching; I’ll write an article on this too, stay tuned). 🏺 • Always check the value of coins in relation to BTC, as this is what truly matters during an alt season. ✅ After 9 years in crypto, I decided to create a series of articles to help both newcomers and seasoned investors navigate this market. I’ll need your help to get this analysis to as many people as possible - a retweet and a like would go a long way in spreading the message. 🙏