Altcoin Season Heating Up Again as Bitcoin Dominance Falls
Bitcoin’s road to $10,000 is starting to rub off on altcoins. On Wednesday, most of the large-cap cryptocurrencies traded in positive territory, helping to push down bitcoin’s dominance rate to fresh three-week lows.
As Ethereum (ETH) held steady above $269, XRP gained 4.7% to $0.4463, a new high for the year. After under-performing the market in the first quarter, XRP has returned 52% over the past month.
Bitcoin cash (BCH) resumed its uptrend, climbing 2.5% to $443.54. Like XRP, BCH touched new yearly highs on Wednesday.
EOS, Litecoin (LTC) and Binance Coin (BNB) each gained less than 1%. All three cryptocurrencies put up large gains earlier in the week.
Bitcoin SV (BSV) was the top performer on Wednesday. The so-called ‘Satoshi Vision’ climbed 24.1% to $149.14. BSV has been surging ever since Craig Wright filed a copyright claim for the original bitcoin whitepaper. The U.S. Copyright Office later said it does not “recognize” Wright as Satoshi Nakamoto, the Bitcoin network’s mysterious founder.
Looking beyond the top-ten, IOTA (MIOTA) put up tremendous gains on Wednesday as it reached the highest level of the year. The internet-of-things cryptocurrency is up 20% at $0.5147. It ranks 15th by market cap and is $40 million away from Dash.
Bitcoin Dominance Falls
Bitcoin’s dominance rate, which refers to the percentage of the crypto market cap allocated to BTC, has been declining gradually for the better part of two weeks. Bitcoin’s dominance peaked on May 13, climbing above 60% for the first time since 2017. It has since fallen back to around 56.2%, according to CoinMarketCap.
This means bitcoin accounts for 56.2% of the $270 billion cryptocurrency market.
Bitcoin’s performance over the past five months clearly shows that investors have identified a definitive bottom for the leading cryptocurrency. Since falling below $3,200 in December, bitcoin’s price has rebounded 170%.
Astonishingly, bitcoin isn’t even the best-performing cryptocurrency of the year. As The Rhythm Trader recently pointed out, Binance Coin, Tezos (XTZ), Litecoin, bitcoin cash and EOS have all outperformed bitcoin in 2019.
Top 10 moves of this year, so far:
Never bet against crypto in a bull market.
— Rhythm (@Rhythmtrader) May 28, 2019
Recent data collected by colleague Kiril Nikolaev suggest that altcoin season is about to heat up again. Bitcoin’s dominance index is still bearish from a macro perspective, which means altcoins and tokens are about to eat up bigger market share. (Note: this doesn’t mean bitcoin is bearish; it just means BTC’s percentage of the overall market will probably decline.)
“The fact that the bulls succumbed to this resistance even after bitcoin’s parabolic run tells us that the index is still bearish. Our bias is affirmed as the bears also manage to recover the horizontal resistance of 58 percent. On top of that, the weekly RSI of the index is overheated.” (Kiril Nikolaev, May 24, 2019)
Against this backdrop, it’s reasonable to conclude that altcoins could see a large buying frenzy in the near term. The usual suspects will likely be the ones reporting the lion’s share of the gains.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Charts via CoinMarketCap.