BTC Dominance Index
The BTC Dominance Index represents the ratio between Bitcoin market share and Altcoin market share. With a value of 64% the level drops to a new annual low today, Friday. Altcoin investors should play this into their cards. Are we facing a new Altcoin season? We take a look at the current market situation.
BTC price in detail
The Bitcoin continues to work its way through resistance in the 9800 USD range on Friday. A 24 hour volume of over 35 billion USD illustrates the interest of investors. New money is reaching the stock exchanges and mainstream media is reporting on the bull market. This is a good starting point for jumping above the magical $10,000 level. In the past 7 days Bitcoin has recorded a price increase of a whopping 5%. The 200-day line was clearly exceeded. The mood is bullish.
Altcoins catch up
The Altcoins are fighting for valuable market shares on Friday. NBB (+ 7.14 %), Chainlink (+ 13.12 %) and Cosmos (+ 7.49 %) are celebrating the biggest price jumps in the Top 30. Ethereum is currently trading at around USD 221. This is a remarkable price gain when one considers that ETH was just about three months ago heading straight for the USD 100 mark. This week, investors pumped over USD 5 billion into the No.2 crypto currency. The Ethereum 2.0 launch could take place as early as the summer and take scalability to a new level. However, one cannot speak of an Altcoin Season at this time.
The Bitcoin has dominated the crypto peloton for over a year. The Altcoins usually follow the “digital gold” at every turn and outliers are considered the exception. This market behavior results from the high BTC Dominance Index. Similar values could be observed in December 2017, when the BTC targeted the USD 20000 mark. Within a few days, the BTC Dominance Index then fell from around 60 % to around 30 %. The Altcoin Season was open and double-digit price breakouts were the order of the day. It is not impossible that history will repeat itself in 2020. However, a major event speaks vehemently against this: The Bitcoin Halving.
Bitcoin Halving is just around the corner
The third Bitcoin Halving is considered to be the biggest highlight in the crypto year 2020: in less than 100 days, the coin rewards will be halved (from 12.5 BTC per block to 6.25 BTC per block) and the inflation rate will approach a value of about 2%. Quite a few experts see a direct correlation between the halving and the BTC price. Only 900 BTC units are then mined every day. As a result, a lower supply can be expected, which would lead to a higher price if demand remained the same. This is the theory.
Crypto market has its own rules
The crypto market is considered a highly volatile forum in which a wide variety of people are active. Besides HODLers and traders, whales and scammers influence the prices of the crypto currencies. FOMO (Fear of missing out) and FUD (Fear, Unvertainty and Doubt) have a greater impact on market sentiment and price movements than any other market. Forecasts are therefore difficult to impossible. From a fundamental perspective, there is currently much to be said for a sustained BTC Bull Run with a Dominance Index of over 60 %. However, there is no guarantee for this.