Key facts: According to NYDIG, there is a lack of interesting new narratives. Not everything can be solved with “a blockchain,” NYDIG explains. While several short-term traders await an altseason, various market data provide a glimpse into why this phenomenon has not yet arrived.
Bitcoin (BTC) dominance in crypto asset capitalization, excluding stablecoins, has been steadily increasing over the past two years. Currently, it represents more than 60%. This movement, shown below, reflects a lower investment preference in altcoins, that is, in cryptoassets other than BTC.
Bitcoin's market cap dominance of the total cryptoasset market, excluding stablecoins. Source: NYDIG. The rise in bitcoin dominance has taken place since the 2022 bear market bottom, from which point it began an uptrend. The coin has appreciated 300% since then, despite trading sideways five months ago below its new all-time high price. This is something that is preventing the possibility of an altseason. Normally, An altseason occurs when BTC dominance declines. This is a product of an expansion of bullish sentiment in the market. According to market financial services firm NYDIG, the key question here is: Why is bitcoin dominance still on the rise, even as it nears the end of its second year of positive price gains? “The answer lies in the absence of a compelling new narrative that captures investors’ attention,” it warns. In a report on the matter, the financial firm recalls that, in the 2017 bull cycle, Ethereum led to an increase in altcoin dominance. This is due to its attention-grabbing role as a platform for decentralized applications (dApps) and a place to raise funds for initial coin offerings (ICOs). Likewise, in 2020, it indicates that decentralized finance (DeFi), non-fungible tokens (NFTs) and emerging competitors to the Ethereum network took center stage in altcoins’ attention. In contrast, it states that currently New altcoin narratives and use cases are struggling to gain traction. “While DePin, AI, memecoins, social tokens, web3, gaming, and play-to-earn (P2E) have seen some success, their impact on industry and society remains relatively limited,” NYDIG says. In fact, it stresses that memecoins seem to have the greatest acceptance in the altcoin market despite their lack of utility. However, it clarifies that their popularity peaked six months ago when the price of bitcoin was rising to new all-time highs. “The dominance of bitcoin and memecoins in this cycle says a lot about the creativity of the industry and the practicality of the technology,” says the financial firm. In its opinion, it is key in this scenario to ask what unique capabilities a cryptocurrency network offers to facilitate use cases. “If a solution does not require the basic principles of the blockchain (trustlessness, permissionlessness, and censorship resistance), it can find better utility hosted on a cloud server,” says NYDIG. The financial firm sums up that “bitcoin continues to increase in dominance as few competing narratives or large use cases emerge in this cycle.” In this sense, the formation of these aspects, as well as the bullish continuity of BTC, seems key for an altseason to occur.
An altseason in 2025 is possible, according to history and economics
The expected interest rate cut in the United States in the remainder of 2024 and the recent launch of Ethereum exchange-traded funds (ETFs) may boost demand for altcoins. Therefore, It seems key to closely monitor how Bitcoin's dominance continues in the coming months.. “Altcoins have significantly underperformed BTC over the past two years, but a potentially looser monetary policy in a year post-halving is the perfect breeding ground for speculation and short-term retail interest,” financial consultant Nikolai Galozi recently commented, as reported by BitcoinDynamic. With the fourth bitcoin halving having occurred four months ago, Galozi Bitcoin's bullish trend is expected to intensify in 2025as is often the case in the year following such an event. He therefore expects altcoins to skyrocket then, although he believes it is crucial to be careful because many disappear forever in the bear market.