Bitcoin Dominance Undergoes Golden Cross, Signaling An End To Altseason; Will There Ever Be A True Altseason Again?

May 20, 2020 / by Zachary Mashiach

Apparently altseason has just ended, signaled by the Bitcoin dominance percentage undergoing a golden cross as can be seen in the below chart. That being said, this recent altseason has been extremely weak, and now that it is over so quickly it brings up the question, will there ever be a real altseason again?

First off, it is important to explain what the Bitcoin dominance percentage is, and how to define altseason. The Bitcoin dominance percentage is the Bitcoin (BTC) market cap divided by the total crypto market cap, and basically this gives an idea of how powerful the Bitcoin (BTC) market is relative to the rest of the crypto market.

Twitter user @CarpeNoctom calculated 50 day and 200 day moving averages of the Bitcoin dominance percentage, and when the 50 day moving average rises up above the 200 day moving average it is considered a golden cross and it defines the end of altseason. On the other hand, when the 50 day moving average drops below the 200 day moving average it is called a death cross, and defines the beginning of altseason.

In other words, when the Bitcoin dominance percentage experiences a golden cross it means it is ‘Bitcoin season’ since the Bitcoin dominance percentage has been consistently rising, whereas a death cross indicates altseason because altcoins are consistently gaining against Bitcoin (BTC).

Although a new ‘Bitcoin season’ has begun, this past altseason was very weak. This altseason kicked off with the Bitcoin dominance percentage declining from 68.9% around the beginning of 2020 to as low as 62.6% in late February, and that was as strong as altseason got. Now the Bitcoin dominance percentage is back up to 67.4%.

In other words, this altseason was only defined by a 6.3% drop in Bitcoin dominance percentage, or equivalently a 6.3% gain in altcoin dominance percentage.

This is merely a blip compared to past altseasons, such as when the Bitcoin dominance percentage declined from 86% to 38% between February and June 2017, or when the Bitcoin dominance percentage declined from 63% to 33% from December 2017 through January 2018.

In fact, zooming out on the long term chart, it seems the only real altseasons were in 2017 and early 2018, and since then the Bitcoin (BTC) dominance percentage has been steadily gaining.

There are fundamentals behind why the Bitcoin dominance percentage has been consistently rising, while the altcoin dominance percentage consistently falls.

Regulations have crippled the altcoin sector. Specifically, initial coin offerings (ICOs) have been effectively banned in the United States, making it very difficult for any new altcoin to launch or succeed. For example, the Telegram TON/Grams ICO, which was the 2nd biggest ICO in history at $1.7 billion, was killed before it could even launch its cryptocurrency.

Likewise, altcoins that already exist have been facing legal action from the Securities and Exchange Commission (SEC). Even EOS, which is one of the biggest and most well-established altcoins, was sued by the SEC and had to settle for $24 million.

That being said, EOS is one of the lucky altcoins since it survived its battle with the SEC. Many other altcoins have literally been killed by SEC action.

Aside from regulatory action, the ICO boom and subsequent bust made investors wary of investing in altcoins. In other words, investors generally lost big when they invested in altcoins, creating an anti-altcoin sentiment across the crypto space.

All of these factors have made Bitcoin (BTC) the prime cryptocurrency to invest in, and the recent block halving only makes investing in Bitcoin (BTC) even more attractive, since Bitcoin (BTC) is now more scarce than ever before.

Altseason may never really come back. In reality there haven’t been any true altseasons since the altseasons of early 2018 ended. Since then Bitcoin (BTC) dominance has been steadily rising, and it appears Bitcoin (BTC) will continue to be the investment of choice in the crypto space as regulatory actions against ICOs and altcoins continue.

That being said, there may be periods of time, such as the first couple of months of this year, where the altcoin dominance percentage rises slightly. However, it is probably not appropriate to classify such periods as an altseason, and it may be time to abandon the term altseason altogether.

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