As Bitcoin (BTC) experiences a notable dip below the $90,000 mark, the broader implications for altcoins are becoming a focal point for traders and analysts alike.
-
BTC dominance dropped as BTC dipped, contrary to previous market dumps.
-
Altcoins like Story IP, Maker, and Hyperliquid posted double-digit recoveries.
Bitcoin’s [BTC] dip below $90K was also marked by a 2% decline in market dominance, a move analysts speculated could relieve altcoins.
In fact, according to pseudonymous analyst Stockmoney Lizard, the decline in BTC dominance as BTC dumped was a new trend.
“Also new: BTC dropping while BTC.D is dropping…This means many Altcoins are forming local bottoms while BTC makes new lows”
Source: BTC.D, TradingView
During the drop to $86K, BTC dominance slipped from 62.28% to 60.9%. A drop in BTC dominance is usually deemed as a capital rotation from the king coin to altcoins.
Last November, the dominance dropped 10%, triggering an altcoin pump that saw XRP post +500% gains.
BTC Dominance: Will Altcoins Recover?
Note, however, that analysts like Arthur Hayes and Galaxy Digital’s Alex Thorn have made calls for a $75K-$85K price range for Bitcoin. Thorn made his projection based on chain price imbalance and stated,
“Looking at BTC supply by price last moved (URPD), there’s mostly air between $75-85k. Market may want to test that range. 200d MA is $81.6, which could provide support if we test it.”
Source: Galaxy Digital
If the projection is validated and the new trend continues, BTC dominance could drop further and offer more relief to the altcoin market. That said, select altcoins pumped double digits on BTC woes. Story [IP] and Celestia [TIA] were up 34% and 22%, respectively, and were among the top daily performers on CoinMarketCap.
Hyperliquid [HYPE] and Maker [MKR] also saw double-digit recoveries.
Over the same period, the altcoin market cap increased from $1.16T to $1.17T, marking a $10B bump. But the altcoin season index was at 25, suggesting it was still a BTC season.
Source: CoinMarketCap
COINOTAG checked the ETH/BTC ratio to understand the altcoin market’s status better. The ratio gauges ETH price performance relative to BTC, and since it’s the king of altcoins, it’s deemed the barometer of the sector.
The alt season seen last November and December was marked by 18% and 25% rallies in the ETH/BTC ratio. On Tuesday, the ratio surged 8% as BTC dominance declined, boosting some altcoins.
Source: ETH/BTC ratio, TradingView
However, the ratio had an overhead hurdle at 0.03 and has declined 32% since December, capping a strong recovery outlook for the altcoin sector. Simply put, the weak ETH/BTC ratio could derail a stronger recovery in the broader sector.
Conclusion
In summary, as Bitcoin faces downward pressure that potentially opens the door for altcoin recoveries, the market’s dynamics are shifting. Should BTC dominance continue to fall, there may be additional opportunities for altcoins to find footing and begin their recovery, especially amid the current economic landscape.
