Key Points
- Bitcoin’s dominance has breached a key threshold, showing signs of overextension and suggesting potential exhaustion.
- Large-cap altcoins, particularly Solana, have experienced substantial capital inflows, hinting at a possible altcoin season.
Bitcoin’s dominance, referred to as BTC.D, has surpassed the 64% level for the first time in over four years. This increase, while technically bullish, is accompanied by a Relative Strength Index (RSI) print deep in overbought territory, suggesting potential exhaustion in Bitcoin’s relative outperformance.
Reflecting the 2021 Cycle
The current setup mirrors the 2021 cycle, where BTC.D marked a local top and the Altcoin Market Index bottomed below 10 level. This was followed by a sweeping rotation into altcoins, signaling a shift in market leadership and the onset of an altcoin season. Given this backdrop, the present dynamics may be forming the prelude to a similar rotation.
In the past week, the total market cap excluding Bitcoin saw a $42 billion increase. This suggests that as Bitcoin’s dominance reached a local peak, altcoins experienced substantial capital inflows. Solana stands out among large-cap altcoins, registering a double-digit percentage increase on its weekly chart.
Testing Bitcoin’s Strength
The altcoin market index saw a sharp rebound, rising from 13 to 20. This price action mirrors the 2024 cycle structure, where the index fell to a similar low in Q3 before rallying back to 87 by early December. If Bitcoin’s price is testing a local top while its dominance shows signs of exhaustion, Solana’s 11% surge could be an early signal of capital rotating into altcoins.
On the 7th of April, BTC.D closed at 64%, breaching a multi-year resistance and marking its highest dominance level since early 2021. At the same time, the RSI printed above 80, signaling an overbought regime and potential exhaustion in Bitcoin’s relative outperformance.
Despite these signals, strategic investors didn’t act decisively. After three consecutive sessions of drawdown in BTC.D, the metric subsequently retraced, breaking back above 64% over the next seven days, thereby solidifying Bitcoin’s prevailing dominance. This shift in behavior signals that a sustained high BTC.D no longer acts as a reliable precursor for capital rotation.
Despite the technical signals, historical trends, and capital inflows, the likelihood of an altcoin season has completely waned.
