Bitcoin (BTC) seems to be taking a major part of the crypto market’s recent recovery when it accounts for 47% of the market.
Bitcoin has gained more than 6% in the last 24 hours, reclaiming the $31,000 mark. Given that the token has been held at $30,000 for over a month, the focus now is on whether it can maintain these gains.
The token has a market capitalization of $599.2 billion in comparison to a global crypto market value of $1.29 trillion.
But while BTC has somewhat held its ground, most other altcoins, except Ethereum, have witnessed a drastic reduction in value. This, combined with the recent Terra crisis, has pushed BTC dominance to levels not seen since July 2021.
Nonetheless, BTC’s dominance may indicate that a major rally is on the way.
High Bitcoin dominance comes before Altcoin rally
High BTC dominance, as witnessed in July, often comes before a strong rally. This can be observed in October 2021, when the market soared to new highs when BTC dominance hit around 47%.
High BTC domination usually suggests that the altcoin market is undervalued, which attracts new investors into the space. The buying then tends to trickle over into BTC, boosting overall valuations.
But the macroeconomic picture is currently different from that of 2021. The Federal Reserve has begun to reduce market liquidity, which has been a major factor in the crypto boom over the last two years.
Any attempts at a price increase may be hindered as a result of this.
Dominance is currently rising alongside alts, which is positive as it indicates they likely still have room to run. My macro sentiment remains largely bearish, however, there’s a strong possibility we see an extended rally in the short term.
-Crypto analyst Miles Deutscher said on Twitter
Will the altcoin rally be temporary or continual?
Despite their recent weakness, most of the leading altcoins have been following Bitcoin’s recent rally.
But Analysts warn that this could be another bull trap, considering the token’s inability to break beyond the $32,000 barrier for over a month. A decrease in the token’s value also results in broader losses.
Still, with the United States stock market expected for a favorable open this week, a short-term crypto surge could be on the cards.