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Bitcoin Has Been on Fire but Altcoins Haven’t Joined the Party – Yet

Last Updated March 4, 2021 2:37 PM
Ryan Smith
Last Updated March 4, 2021 2:37 PM

Bitcoin is on fire this year but you can’t quite call it a “crypto comeback”… just yet, as The Wall Street Journal  points out. Investors are starting to doubt a corresponding return in alternative cryptocurrencies, and for good reason. Altcoins are still well off their 2017 highs. Many alts have, in fact, gone to zero while their more established cousins try to recuperate some of their more than 70% losses.

crypto performance
Bitcoin has recovered more than half its losses. | Source: WSJ/CoinMarketCap

Bitcoin, on the other hand, is the only asset to have recovered more than 50% of its losses to date. Until other established names follow its big brother back into more familiar territory, it’s still a one-man show.

Bitcoin Dominance Approaching Multi-Year Highs

Bitcoin market dominance has done a complete u-turn since early 2018 when it featured only 32% of the total market capitalization of the industry. This, at least, according to CoinMarketCap’s records, which track 2,000 different cryptocurrency valuations on a daily basis.

As the Wall Street Journal reports, that figure has steadily risen to 62% this year, almost doubling in less than a year and a half. The last time bitcoin was this dominant was in the middle of 2017 when investors were greedily plowing their money into altcoins.


Bitcoin dominance

From the looks of it, you could probably even trade the dominance chart itself. Technically, the current breakout from 2017 highs suggests that bitcoin’s dominance may actually continue.

Crypto Comeback: A Rising Tide Lifts All Boats

Will altcoin season ever return? The jury is still out. Bitcoin maximalists are having a field day on social media speculating that altcoin season take-two won’t ever materialize. Of course, anything can happen in Crypto Land and it usually does. After all, the term ‘maximalist’ probably wouldn’t have come into being if it wasn’t for 2017’s crazy altcoin run.

The theory goes that in a stable investment climate, not unlike stocks, investors will start allocating their resources into riskier assets. From low to high:

Cash > Bitcoin > Alts

As they become more cautious panic, they’ll move in the opposite direction. It’s simplistic, but it makes a lot of sense. Bitcoin and to a lesser extent Ethereum are gateways into the alt world. It’s quite possible that we’ve now reached that point. As bitcoin recovers and stabilizes, market participants may once again feel comfortable enough to roll the dice on the next big thing.