Bitcoin Dominance and Altcoin Season: A Cycle Analysis
Updated
This chart represents Bitcoin (BTC) dominance, illustrating the historical and potential future market trends where altcoins experience a notable surge, commonly referred to as "alt season." This phenomenon occurs when Bitcoin's dominance wanes, leading investors to explore new projects and allocate funds into altcoins and memecoins. Historically, after significant rallies, investors often look for higher-risk, higher-reward opportunities, typically turning to altcoins once Bitcoin has peaked.
Speculative Scenarios for BTC Dominance:
The chart speculates on three different scenarios for when Bitcoin might reach its peak, subsequently leading to a drop in BTC dominance and potentially initiating a rally in smaller cryptocurrencies. These scenarios are:
Failed Cycle:
-Suggests that the top for Bitcoin is already in, indicating a potential downward trend from the current levels.
-This would lead to an immediate decline in BTC dominance, possibly accelerating the start of an altcoin rally.
Left-Translated Cycle:
-Predicts that Bitcoin will reach its peak by November 2024.
-Following this peak, BTC dominance is expected to fall, marking the beginning of an altcoin season.
-This cycle anticipates a shorter rally for Bitcoin but a quicker transition to gains in altcoins.
Normal (Right-Translated) Cycle:
-Forecasts a continued rally for Bitcoin into 2025, with a potential top around March 2025.
-BTC dominance will gradually decrease, allowing for a more extended period of gains for altcoin investors.
-This scenario aligns with expectations of rate cuts and a possible recession by winter, suggesting that Bitcoin might lag slightly compared to the S&P 500.
Personal Strategy and Market Outlook:
I personally favor the right-translated cycle theory. There is substantial evidence supporting this scenario, particularly with the anticipation of rate cuts and an economic downturn by winter. My expectation is for Bitcoin to peak around March 2025, slightly trailing the S&P 500.
However, my strategy involves monitoring BTC dominance closely. Once it breaks the green trendline and begins to fall, I will start selling my altcoins when BTC dominance has declined by approximately 15%. This approach ensures that I capture gains from the altcoin market without missing out on the selling opportunity due to an early or delayed reaction.
Balancing Certainty and Risk:
While the right-translated cycle might offer more significant gains for altcoin investors, adhering strictly to this belief without considering the left-translated cycle could result in missed opportunities. For me, securing certain gains outweighs the risk of holding out for potentially higher but uncertain returns. Therefore, I plan to act decisively when key indicators, such as the decline in BTC dominance, signal a shift in the market dynamics.
In conclusion, the BTC dominance chart provides valuable insights into the potential timing and impact of Bitcoin's market cycles on altcoins. By understanding and anticipating these cycles, investors can strategically position themselves to maximize their returns in the ever-evolving cryptocurrency landscape.
Speculative Scenarios for BTC Dominance:
The chart speculates on three different scenarios for when Bitcoin might reach its peak, subsequently leading to a drop in BTC dominance and potentially initiating a rally in smaller cryptocurrencies. These scenarios are:
Failed Cycle:
-Suggests that the top for Bitcoin is already in, indicating a potential downward trend from the current levels.
-This would lead to an immediate decline in BTC dominance, possibly accelerating the start of an altcoin rally.
Left-Translated Cycle:
-Predicts that Bitcoin will reach its peak by November 2024.
-Following this peak, BTC dominance is expected to fall, marking the beginning of an altcoin season.
-This cycle anticipates a shorter rally for Bitcoin but a quicker transition to gains in altcoins.
Normal (Right-Translated) Cycle:
-Forecasts a continued rally for Bitcoin into 2025, with a potential top around March 2025.
-BTC dominance will gradually decrease, allowing for a more extended period of gains for altcoin investors.
-This scenario aligns with expectations of rate cuts and a possible recession by winter, suggesting that Bitcoin might lag slightly compared to the S&P 500.
Personal Strategy and Market Outlook:
I personally favor the right-translated cycle theory. There is substantial evidence supporting this scenario, particularly with the anticipation of rate cuts and an economic downturn by winter. My expectation is for Bitcoin to peak around March 2025, slightly trailing the S&P 500.
However, my strategy involves monitoring BTC dominance closely. Once it breaks the green trendline and begins to fall, I will start selling my altcoins when BTC dominance has declined by approximately 15%. This approach ensures that I capture gains from the altcoin market without missing out on the selling opportunity due to an early or delayed reaction.
Balancing Certainty and Risk:
While the right-translated cycle might offer more significant gains for altcoin investors, adhering strictly to this belief without considering the left-translated cycle could result in missed opportunities. For me, securing certain gains outweighs the risk of holding out for potentially higher but uncertain returns. Therefore, I plan to act decisively when key indicators, such as the decline in BTC dominance, signal a shift in the market dynamics.
In conclusion, the BTC dominance chart provides valuable insights into the potential timing and impact of Bitcoin's market cycles on altcoins. By understanding and anticipating these cycles, investors can strategically position themselves to maximize their returns in the ever-evolving cryptocurrency landscape.
Trade active
Still holding support trend. Ill update when the trend is crossed, indicating a top in BTC price, and a short altcoin "season" for a few weeks. Trade closed: target reached
Tradingview wont let me update this with "trading active" status, but i will continiue to update this.
The trendline has been crossed.
This is a sign of concern that should be taken seriously, and I am monitoring it closely. However, given the overall market and its position in the 4-year cycle, I am not ready to let this influence my emotions just yet.
I am viewing this as a potential fakeout. Earlier, I predicted my sell signal to be 15% below the green trendline (48.6%).
Historically, altcoin sell signals have also flashed 40-70 days after BTC’s cycle top. This means that if BTC is peaking now, there is no imminent sell signal in the coming days, but rather in the next month or so.
By creating a channel, we can expect to reach 25% dotted line at BTC.D at 54% around Des 17 or later in januar. If we go down to below 50% I will start selling.
Note
Longer timeframe idea:
Note
Looks like the trendline break was a fakeout as the trend angle is recovered again. Thats good news as it lets us continiue with this bullmarked for longer.
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