It is a known fact that Bitcoin is the most dominant crypto in the market, sharing nearly 50% of the global market capitalization. The asset surged more than 6% in the past 24 hours, regaining the lost positions above $31,000. However, when the BTC prices were cemented around $30,000 for almost a month now, will the current spike be held or it is just a short-term bounce?
The BTC price holding $31,000 and the dominance of over 46% are extremely important for the other altcoins to shine. No doubt the altcoins do possess their own independent rallies, yet follow the primitive token.
It is quite evident with Ethereum, as despite huge short liquidations, the asset remained restricted below $1900. Therefore, the recent couple of pullbacks and crashes have not impacted the dominance at the peak, and hence it indicates a strong rally is still in place.
Why High Bitcoin Dominance is Very Crucial
The past year displayed a massive bull rally not once but twice. Each time just before a huge altcoin rally, the dominance had peaked with the BTC price also hitting a new ATH each time. High BTC dominance usually indicates the altcoins have been heavily undervalued and hence its the time when the funds may flow into them from Bitcoin.
However, the current scenario is a little distinct from the 2021 rally as the liquidity has dried up in the market with reduced activity. Previously, while Bitcoin was ranging high, altcoins appeared weak. However, currently, despite the BTC price showing some signs of upswing along with most of the altcoins, the rallies of Bitcoin & altcoins are extremely weak. And hence any bounce appears to be just a short-lived ‘dead cat bounce’, which is primed to tank down massively.
On the other hand, external factors like the FED interest rate, stablecoin regulation, ban on mining in some regions, etc may deeply impact the Bitcoin (BTC) price and its dominance. And hence the altcoins may also find it a tedious job to maintain the strength to ignite a significant upswing.