Bitcoin (BTC) has tightened its grip on the cryptocurrency market, reaching a 3.5-year high in market dominance as altcoins struggle to keep pace. This surge comes as the US election casts a shadow over the market, adding to the prevailing uncertainty.
While Bitcoin remains less than 4% below its recent near-record high of over $73,000, major altcoins like Ethereum (ETH) and Solana (SOL) have suffered significant losses, dropping nearly 10% from their recent peaks. The broader market, as represented by the CoinDesk 20 index, also declined by almost 6%.
Smaller cryptocurrencies fared even worse. The combined market capitalization of altcoins excluding the top 10, tracked as “OTHERS” on TradingView, plummeted to its lowest level relative to Bitcoin since early 2021. This dramatic price action propelled Bitcoin’s market cap dominance to 60.6%, its strongest position since April 2021.
Analysts at Bitfinex noted, “Altcoins are now seeing severe drawdowns whenever BTC pulls back.” They attribute this to Bitcoin absorbing the majority of capital inflows into the crypto market, leaving altcoins struggling to compete. “Without a fresh catalyst, their prospects for a comeback in the near-term appear slim.”
The report highlights the disappearance of speculative interest that previously fueled brief periods of altcoin outperformance. The normalization of funding rates in perpetual futures markets further supports this observation.
Looking ahead, Bitfinex analysts predict Bitcoin’s dominance over altcoins may persist. “We believe that the altcoin market may experience further declines relative to bitcoin in the mid-term, primarily due to the apathy of speculators.” This suggests a challenging environment for altcoins in the near future, with Bitcoin continuing to command the market’s attention and investment.
