Bitcoin (BTC) is sucking up the volume from the entire cryptocurrency market as it continues to rally. This is causing the alternative cryptocurrency (altcoin) market to pullback, which has seen rising selling pressure and low buyer demand.
On Oct. 30, researchers at Santiment pinpointed the growing volume and dominance of Bitcoin, while Chainlink (LINK), Ether (ETH) and Binance Coin (BNB) struggled. They wrote:“The dominance involving #Bitcoin is continuing to display itself, particularly via trading volume. When comparing other top blockchains in the past day, note the decline in $ETH, $XRP, $LINK, and $BNB trading volume, while BTC's levels stayed high.”
At least in the foreseeable future, traders believe the so-called “altseason” is not returning, especially as Bitcoin outperforms altcoins.The trading volume of Bitcoin against other major cryptocurrencies. Source: Santiment When would altcoins recover?
Historically, during bull markets, the cryptocurrency market saw Bitcoin experience a rapid uptrend first. Then, altcoins followed, after BTC surged to a local peak or an all-time high.
Traders foresee a similar pattern playing out in the current price cycle, generally expecting altcoins to recover in 2021. But until BTC stabilizes and completes its rally, traders do not see a proper altcoin uptrend happening.
Since Sept. 13 lows, the Bitcoin dominance index has increased from 56% to 63.4%, recording a 7.4% increase within two months.The Bitcoin dominance index. Source: CoinMarketCap.com
However, Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said an altseason in the first quarter of 2021 is possible. He said:“Dominance hit the red zone here. Still waiting until December for a top structure on this one. After that -> Quarter 1 altseason.”
The problem with altcoins is the current dynamic of the cryptocurrency market. When Bitcoin rises quickly, altcoins fall as capital cycles...