Key facts:
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According to NYDIG, there is a lack of interesting new narratives.
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Not everything can be solved with “a Blockchain,” explains NYDIG.
While many short-term traders are waiting for an altseason, various market data provide a glimpse into why this phenomenon has not yet arrived.
Bitcoin (BTC) dominance in the capitalization of cryptoassets, not counting the stablecoinshas increased steadily 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 market cap dominance in the total cryptoasset market, excluding stablecoins. Source: NYDIG.
The rise of the domain of bitcoin has taken place since the bearish bottom of 2022, from which point it started an upward trend. The coin has appreciated by 300% since then, despite moving sideways five months ago below its new historical maximum price. This is something that is preventing the possibility of an altseason.
Normally, An altseason occurs when BTC dominance declinesThis is a result of an expansion of bullish sentiment in the market.
According to 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,” he warns.
In a report on the matter, the financial company remember that, in the bullish cycle of 2017, Ethereum-eth/” target=”_blank” rel=”noreferrer noopener”>Ethereum led to a rise in Altcoin dominance. This is due to its role as a platform for decentralized applications (dApps) and a fundraising venue for initial coin offerings (ICOs).
Likewise, in 2020, it indicates that decentralized finances (DeFi), non-fungible tokens (NFT-non-fungible/” target=”_blank” rel=”noreferrer noopener”>NFT) and emerging competitors to the Ethereum network took center stage in altcoin attention.
In contrast, he claims 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 said.
In fact, he stresses that memecoins seem to have the most acceptance in the altcoin market despite their lack of utility. However, he 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 speaks volumes about the creativity of the industry and the practicality of the technology,” the financial firm says. In its view, 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 core principles of blockchain (trustlessness, permissionlessness, and censorship resistance), it may find better utility hosted on a cloud server,” NYDIG believes.
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 cut of interest rates in the United States for the remainder of 2024 and the recent launch of exchange-traded funds (ETF) of Ethereum can 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 potentially looser monetary policy in the year following the halving is the perfect breeding ground for speculation and short-term retail interest,” has commented recently financial consultant Nikolai Galozi, as reported by CriptoNoticias.
The fourth having occurred halving of bitcoin four months ago, Galozi wait for the uptrend Bitcoin’s growth will increase 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.
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