BTC Dominance Abruptly Ends Altcoin Season

2023-07-27, 06:42

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## [TL; DR]
The Bitcoin dominance rate dropped below 50% during the second week of July.

Bitcoin is likely to dominate the crypto market within the short term.

The TD sequential indicator predicts that it will take time for altcoins to recover.

## Introduction
Most cryptocurrency investors use various metrics to predict the market direction to make informed decisions. There are several metrics like Bitcoin dominance as well as the greed and fear index that give investors essential clues on the performance of the market. Today, we discuss how the [bitcoin dominance rate can assist crypto traders](https://www.gate.io/blog_detail/1732/what-is-bitcoin-dominance-and-how-does-it-affect-investor-portfolios "bitcoin dominance rate can assist crypto traders") and other investors to understand the cryptocurrency market.

## How the XRP Ruling Has Affected the Bitcoin Dominance
The Bitcoin dominance, a metric that shows the ratio of <a href="/ru/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a>’s market capitalization to the total altcoin market cap, fell by 2.6% to 50.14% [after the Ripple victory](https://www.gate.io/blog_detail/2927/ripple-price-after-victory "after the Ripple victory") against the SEC on 13 July. It further dropped to 49.76% on 14 July during the Asian Trading hours. According to the data from TradingView this is the largest decrease of Bitcoin dominance in one day since 13 June 2022.

On 13 July, the District Court for the Southern District of New York declared that <a href="/ru/price/xrp-xrp" target="_blank" class="blog_inner_link">XRP</a> is not a crypto security if it is traded on the exchange. However, it becomes a security if it is sold directly to institutional investors.

This ruling was significant as it put off track the Securities and Exchange Commission's (SEC) aim to [designate most altcoins as crypto securities](https://www.gate.io/de/blog_detail/2708/sec-labels-37-cryptocurrencies-as-securities-implications-for-trading "designate most altcoins as crypto securities"). More significantly, the recent fall in the bitcoin dominance has created hope that a sustained altcoin season is about to start.

It is essential to note that the [bitcoin dominance rose above 50%](https://www.gate.io/blog_detail/1306/the-calculation-and-the-significance-of-bitcoin-dominance "bitcoin dominance rose above 50%") within the last few weeks, following a long period when it was below that mark. Basically, the dip in the bitcoin dominance has come at a time when the market is expecting an altcoin season.

## Is an Altcoin Season on its Way
The events of the previous two weeks indicate a rise in altcoin dominance. This follows the gains which several altcoins had after Ripple’s partial victory against the US SEC. For instance, the value of XRP rose by almost 98% after the SEC vs Ripple Labs ruling.

Several other major cryptocurrencies, with large crypto market caps, also gained much on 14 July. In fact, on that day most of the altcoins were in green. In particular, most major cryptocurrencies which the SEC previously designated as securities gained by double figures. As an example, the price of Ether (ETH) rose by around 8% to close the day, on 14 July, trading above $2,000.

The price of <a href="/ru/price/cardano-ada" target="_blank" class="blog_inner_link">Cardano</a> (ADA) increased by 25% to trade at $0.357 while the value of <a href="/ru/price/solana-sol" target="_blank" class="blog_inner_link">Solana</a> (SOL) increased by 34% to reach $29. Also, <a href="/ru/price/polygon-matic" target="_blank" class="blog_inner_link">Polygon</a> (MATIC) and <a href="/ru/price/stellar-xlm" target="_blank" class="blog_inner_link">Stellar</a> (XLM), gained by 20% and 50% respectively following the news of Ripple’s victory.

However, the market is waiting to see if the altcoin rally will continue for a long period. In terms of the long-term market outlook most of the major cryptocurrencies are moving within market channels.

In the meantime, several market observers believe that altcoins are likely to dominate the market in the near future. For instance, Decentral Park Capital said *"Alt season may be upon us following the Ripple news as indicators collectively suggest risk appetite is funneling down the risk continuum. With the U.S. dollar breaking down and the inflation battle nearing the end, it appears to be game on for investors.”*

## Bitcoin May Dominate in the short Term 
The TD Sequential indicator has shown that Bitcoin may dominate the altcoins in the short term. According to the BTC.D charts it is most likely that it will take a longer period for altcoins to recover.

Also, according to a Twitter user by the name @ali-charts, the TD Sequential chart recently presented a bitcoin buy signal which shows that BTC will dominate in the short-term. [Ali tweeted](https://twitter.com/ali_charts/status/1681977543375609856 "Ali tweeted"), *“Bitcoin is working on that buy signal presented by the TD Sequential we spotted the other day. I believe $BTC 's first target is $30,600 and the potential second target is $31,300.”*

However, for Bitcoin to maintain its current momentum it should not fall below $29,800. If it maintains its upward pressure, it is likely to surpass the $30,600 and $31,300 levels. The following chart presents the essential information clearly. 
![](https://gimg2.gateimg.com/image/article/16904400245431690439706_.pic.jpg)
Bitcoin’s Next Move - Twitter

One critical point on the chart is the $30,370 level at the high of the last green bar. The candlesticks leading to that point show a potential of a strong <a href="/ru/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin price</a> surge. However, considering the long-term trend, BTC is still moving sideways.

## Conclusion 
Within the second week of July there was a slump in the bitcoin dominance rate. That followed a surge in altcoins prices like SOL, ADA and <a href="/ru/price/bnb-bnb" target="_blank" class="blog_inner_link">BNB</a> which increased their crypto market cap. Although the BTC market cap rose during that period, it failed to match the rise in the market capitalization of the major altcoins. However, the TD Sequential indicator shows that Bitcoin is likely to dominate the market in the short-run.

## FAQs About Bitcoin Dominance 
### What is altcoin season?
An altcoin season is a period when prices of most altcoins perform better than that of bitcoin. In this case, the total market capitalization of altcoins will be higher than that of Bitcoin.

### How does bitcoin dominance affect altcoins? 
If bitcoin dominance rises the values of most altcoins will decrease. On the contrary, if bitcoin dominance falls the prices of most altcoins will rise. When the bitcoin dominance is high crypto investors would prefer to hold most of [their crypto investments on Bitcoin](https://www.gate.io/how-to-buy/bitcoin-btc "their crypto investments on Bitcoin") and vice versa.

### What happens in altcoin season? 
During an altcoin season the prices of altcoins perform better than that of Bitcoin. Most crypto investors prefer to invest more in altcoins than in Bitcoin.

### Is Bitcoin dominance real? 
Bitcoin dominance is real because there are times when the greater proportion of the total crypto market capitalization is that of bitcoin. If the prices of most altcoins are very low while the value of Bitcoin is very high then Bitcoin dominates the crypto market.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>