You constantly hear of a new altcoin season, but all that happens is lower price levels. The most influential element in this equation is Bitcoin dominance. Bitcoin dominance is the ratio of the market capitalization of bitcoin to the rest of the crypto market.
Bitcoin dominance = Bitcoin market cap/ Total cryptocurrency market cap
Just in case you don't understand, the calculation for Bitcoin market cap is as follows:
Bitcoin market cap = Bitcoin price X Bitcoin circulating supply
Investors and traders of cryptocurrencies use bitcoin dominance to adjust their trading/investment strategies. The other characteristics of a higher Bitcoin dominance are the following:
There are other things we could discuss, but these are beyond the scope of this blog. What I will say is that there is a simple strategy anyone can follow with these two moves. First, know when we are in a bull or bear market, and follow the BTC dominance as it happens. If BTC dominance increases, we will likely be in a bear market. If BTC dominance decreases, then we are in a bull market. Second, pair your favourite altcoin with Bitcoin. When the price falls against BTC, it means staying out of the investment. Otherwise, do the opposite. Let us now look at a few examples.
We will start with Cardano; remember, we will pair ADA with BTC. To capture as much information as possible, the timeframe applied is weekly. ADA's price trajectory since August of 2021 has been downward. It means the price of ADA is falling relatively to that of BTC. Hence, it would be advisable not to put resources into this cryptocurrency.
Next is Polkadot (DOT). As you can see, this is very similar to the ADA chart. Again, the price of DOT is falling relative to that of BTC. Hence, one should not invest in this cryptocurrency.
Now we look at Solana (SOL). Here we have something different. While we have a downward trajectory in price, it is not as steep. It requires us to watch this pair closely. We also see that as long as the price does not fall below the white line, the SOL/BTC pair remains promising.
The MATIC/BTC chart is also similar to the SOL chart. We can see that the price action with this pair is sideways. We also see that the white line gives us a target area to observe. Breaking through the target area means we hold our current position and make no commitment to obtain any MATIC.
This analysis is highly simplified, but observations like these will help you make quick decisions. Of course, this is not financial advice, but this should help. Your due diligence and research are mandatory before committing any money. What remains is when Bitcoin's dominance will change, and of course, altcoins will become exciting once more. As for that, your guess is as good as mine.
Swap your cryptos here:
Nosa Capital concentrates its' expertise in Strategy, Business Development, Project Management, Project Finance, Trending, and now cryptocurrencies