The dominance of Bitcoin represents the most important drive behind the institutional interest and its adoption in the mainstream. Since it currently has a dominance of 51.8%, it looks like there could be room for upside in the market’s altcoins.
Altcoin traders had a ball when Ethereum reached a new ATH of $2,547 several days ago and, despite the correction, the altcoin continued to be traded close to that ATH, which has made many think that the crypto could restart its rally shorty.
Ethereum often leads the altcoin rally as it has a strong connection with both Bitcoin and other top crypto assets. Given the volatility of these weeks, traders are now asking if the altcoin season is here.
Co-founder and analyst at Jarvis Labs, Ben Lilly, has recently given an interview in which he spoke about the best metrics to use in order to work out if an altcoin season is going to start. Despite the fact that many analysts have said that we already are in an alt season, Lilly declared:
“I think this is a fair view of altcoin season, but it’s not necessarily one I subscribe to. Simply because if this is a definition for altcoin season, it’s not a compelling reason for me to move away from Bitcoin and into altcoins from a risk-adjusted perspective. Because in that definition of altcoin season, Bitcoin is still the preferable asset to own.”
Lilly also recognizes the use of support and resistance levels to understand macro-level trend shifts in the market, according to AmbCrypto.com. He also added that Bitcoin’s dominance chart represents the best way to discover the percentage of the market that Bitcoin actually holds.
“Right now, it’s trading in a range, which is to say an ‘expected’ range. And because it’s trending down, this is good for altcoins as Bitcoin concedes some dominance to other coins… While many might point to this and say it’s an ‘altcoin season,’ I’ll point out that this type of activity tends to happen in a bull cycle because new money is moving in.”
Lilly claims that we’ve been trading in this range of “expectation” from mid-2019, which is actually when Bitcoin’s low was established and started to turn bullish.
“We recently jumped out of this range in late 2020, and when we did, Bitcoin went on an absolute tear. During this run, altcoins lost value. And similar to how Brent Johnson described his dollar milkshake theory, Bitcoin sucked up the market’s liquidity as it ran higher. We have since returned to this range of expectations, also known as the normal area of the market.”
Source: Ambcrypto.com