Bitcoin Dominance Approaches Historic Resistance Level That Could Trigger a New Altcoin Season

Bitcoin dominance in the crypto market is approaching a historic resistance level that has previously triggered major reversals.

Bitcoin (BTC) dominance is fast approaching a crucial technical resistance that could spark a collapse toward 40% and potentially trigger a new altcoin season, according to technical analysis published on TradingView.

A Major Technical Resistance Could Spell Trouble for BTC Dominance

Examining the weekly candlestick chart reveals that Bitcoin dominance is nearing a critical historic resistance level—the lower boundary of the green channel highlighted above.

This phenomenon has unfolded before, and each time this descending trendline has been reached, a major reversal occurred, as highlighted by the red circles.

The technical analysis suggests that history could repeat itself, potentially leading to a drop toward 34.9% in the most bearish scenario, or 40% in a less extreme case.

Unlike previous cycles, Bitcoin dominance has followed a different dynamic this time. It has surged significantly since the start of the current cycle, contrary to the anticipation of many investors who expected a swift decline for a vibrant altcoin season.

This occurrence can be attributed to the growing presence of institutions in the Bitcoin market, particularly with the introduction of Spot ETFs. These ETFs have siphoned off a substantial portion of the crypto market cap toward BTC, hindering the potential for altcoins to flourish.

Which Altcoins Stand to Gain From a Decline in Bitcoin Dominance?

A decrease in Bitcoin dominance would imply that the altcoin market is outperforming the flagship cryptocurrency.

In such a scenario, the first to benefit would likely be established cryptos that have endured multiple market cycles, often referred to as “DINO” (Dinosaurs In Name Only). These include Ethereum, XRP, Cardano, Chainlink, BNB, and Litecoin.

However, it’s crucial to note that the current context differs significantly from the bullish markets of 2017 and 2021. Back then, a few hundred altcoins were in the spotlight, while today, thousands of cryptos are vying for investor attention.

Furthermore, the presence of Spot Bitcoin ETFs, which lock up significant long-term liquidity, could limit the magnitude of the flow toward altcoins.

Beyond large-cap cryptos, certain specific sectors such as artificial intelligence, tokenized real-world assets (RWA), and decentralized finance (DeFi) could also attract investor interest.

Even within these categories, a rigorous selection process will be necessary to identify the most promising projects.

The potential drop in Bitcoin dominance could thus mark the beginning of a new phase in this market cycle, where altcoins gradually regain their attractiveness to investors.