Based on my analysis of Bitcoin dominance since January 2023, using a combination of indicators and historical analysis, I have reached an important conclusion regarding Bitcoin’s behavior and its relationship to the altcoin season. When dominance reached the 58.30% level, I identified it as a pivotal point signaling the beginning of the altcoin season. This level often marks the peak of Bitcoin dominance, where investors start shifting their investments to altcoins as Bitcoin’s dominance begins to decline.
Historically, when Bitcoin dominance reaches high levels in conjunction with overbought conditions on the Stochastic and RSI indicators, dominance tends to drop significantly. The initial decline is often followed by a temporary corrective rise, known as the second wave, where Bitcoin achieves additional gains before altcoins start attracting liquidity again.
The corrective rise typically coincides with liquidity flowing from altcoins back into Bitcoin, as investors seek safety in more stable assets like Bitcoin to avoid missing out on potential investment opportunities. However, when the significant drop in Bitcoin dominance begins, it signals the start of the altcoin season, where capital flows from Bitcoin into other cryptocurrencies.
Historically, this wave can be divided into four stages:
1. Bitcoin dominance reaches record highs on the Stochastic indicator.
2. The first drop in dominance occurs.
3. A corrective rise is followed by a historical rally for Bitcoin.
4. The major decline in dominance begins, coinciding with a strong surge in altcoins.
The expected timeline for this wave starts in October 2024, with the first decline, which is projected to end in December. After that, we will likely see a corrective rise in January 2025, extending through April, followed by a significant drop beginning in April and continuing until the end of 2025, marking the end of the current Bitcoin cycle and the start of a new one.
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