Altcoins are any cryptocurrency other than bitcoin.
Data from TradingView show bitcoin's dominance rate rose to 48% from 42% during the first quarter and has struggled to surpass that level so far this month.
The metric has oscillated between 38% and 48% for almost two years, with declines from 46% to 48% coinciding with outsized gains in altcoins.
"Bitcoin’s dominance could peak out, this would signal that altcoins would outperform," Markus Thielen, head of research and strategy at crypto-services provider Matrixport, said in a note to clients on Thursday.
The chart shows that the total market cap of altcoins (white line, blue arrows) rose more than 60% to $1.39 trillion in the two months after the BTC dominance rate turned lower from 48% in July 2021. Similar bearish turnarounds in the dominance rate in mid-October 2021 and June 2022 also pushed altcoin valuations higher.
History could repeat itself, according to Thielen.
"Bitcoin’s dominance appears to be peaking out at similar levels as in 2022 – accounting for 45/46% of the total crypto market capitalization," Thielen said. "For bitcoin to continue outperforming the rest of the ecosystem would imply that only bitcoin matters, which appears to be unlikely considering the intellectual and financial firepower that is being deployed on other chains.
"Bitcoin benefited from U.S. liquidity, but going forward, this could change," he said.
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