According to a new report from HashKey Capital, altcoins depend on several developments that just haven’t materialized yet.
Posted October 25, 2024 at 1:33 pm EST.
In past cycles, one trend has been clear: bitcoin rises, drawing most of the capital and attention, and then altcoins follow, seizing the market spotlight. When bitcoin reaches a point of high dominance, investor interest often pivots to altcoins, pushing their values upward as traders seek higher-risk, higher-reward opportunities. But the current cycle has broken from that pattern. So will altcoins finally get their moment this time around?
According to research from crypto investment firm HashKey Capital, altcoin season has a long way to go, and bitcoin dominance, also known as BTC.D on trading platforms, isn’t close to where it needs to be. Bitcoin dominance refers to what percentage BTC comprises of the total crypto market cap.
Typically, for altcoins to rally in full force, BTC.D would need to climb above 62%, according to HashKey, signaling that bitcoin has taken enough market share for capital to flow into other assets. But right now, BTC.D sits at around 55%. Based on HashKey’s analysis, bitcoin would need to soar to around $76,000 to $92,000 to push BTC.D into that optimal range. And until that happens, altcoins may remain in the background as bitcoin retains the lead.
A big factor holding back altcoin momentum is market sentiment. HashKey points out that investors’ risk appetite remains low, particularly in the wake of global monetary policy shifts and increased interest in “safer” assets such as gold. Bitcoin has held up comparatively well as a perceived store of value, but with the BTC-to-gold ratio dropping from 33.6 to 23 in the past year, the demand for bitcoin as a “digital gold” alternative hasn’t been enough to inspire a shift toward altcoins just yet.
If history is a guide, bitcoin’s bull runs have created opportunities for altcoins to shine—but only after BTC dominance peaks. In the 2017-18 altcoin season, for example, bitcoin dominance dropped from around 62% to 33% as new tokens launched during the ICO boom. Similarly, the 2020-21 altcoin season saw DeFi and NFT projects rally as bitcoin dominance fell from 70% to 40%. For a similar trend to occur this cycle, bitcoin’s price would likely need to reach that $80,000 mark to create the right conditions for capital to flow into altcoins.
Another wild card in all this is the upcoming U.S. presidential election, which could influence the crypto market. HashKey’s analysis shows that bitcoin has historically gained momentum in the months following elections, as economic policies and investor sentiment stabilize. While regulatory uncertainty remains, the results could shape how capital moves, with any perceived stability potentially increasing investor interest in riskier assets such as altcoins.
Moreover, if pro-crypto Donald Trump wins the election, some experts say altcoins will be a major beneficiary, since bitcoin is already established in the regulatory landscape, while altcoins currently operate under much uncertainty.
Read more: Why Altcoins May Be the Best Bet if Trump Wins the U.S. Presidential Election
So, will altcoin season come soon? The answer hinges on bitcoin’s performance, a shift in risk appetite, and geopolitical events such as the U.S. elections on Nov. 5. Until then, altcoin enthusiasts may have to just keep waiting for the tides to turn.
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