Bitcoin Hits ATH Yet Loses Market Share, Setting Up a Potential ‘Alt-Season’

Bitcoin, often referred to as digital gold, recently reached an all-time high, trading at over $120,000. Experts have attributed the surge to numerous factors, including billions of dollars channelled into this crypto via spot ETFs and a weakening US dollar. This is a historic moment for crypto enthusiasts, but something surprising is happening.

Despite Bitcoin’s price skyrocketing, its market dominance is waning. It’s still higher than that of the other digital assets, but the numbers are relatively lower. Conversely, altcoins like Ethereum are gaining traction at a commendable pace.

Why BTC’s Dominance is Dropping Despite the ATH

The first factor contributing to Bitcoin’s declining market share is the rise of ecosystem tokens, such as Ethereum, Polygon, and Avalanche. Crypto enthusiasts are flocking to these assets because, unlike Bitcoin, which serves as a primary store of value, they can be utilised in the day-to-day operations of dApps and protocols. For instance, ETH can be used to pay gas fees and deploy smart contracts.

Additionally, many investors who have recently made a significant profit are using their earnings to purchase promising small-cap and mid-cap altcoins. Most believe BTC has hit the proverbial ceiling and has very little room to grow, so they opt for other digital assets. If you consider investing in small-cap and mid-cap altcoins, be sure to research the available assets and learn how to maximize your crypto investments with an Australian-regulated broker before making a decision.

Is an Alt-Season Around the Corner?

Since Bitcoin has already hit an ATH, there’s a high likelihood altcoins will experience a massive breakout. In other words, expect many altcoins to outperform the infamous Digital Gold for a considerable period. This trend will likely be facilitated by a variety of drivers, including:

• Capital rotation after BTC’s all-time high
• Ecosystem tokens’ rising popularity
• Fear of missing out (FOMO) in retail investors
• Investors searching for the next Bitcoin
• Increased retail participation after the Bitcoin ATH

Historical patterns and alt-seasons in past cycles

Based on historical patterns, Bitcoin ATHs and alt seasons often go hand in hand. For instance, in early November 2021, BTC peaked at a little over 64k USD. Within a short period, the prices of most altcoins surged, with Ethereum surpassing the $4,500 mark. Furthermore, in early November 2024, the price of BTC began rising at an incredible pace. Popular altcoins like ETH followed suit a short while later and soared to phenomenal heights.

In most cases observed, Bitcoin experienced a strong rally, followed by an equally significant surge in altcoins within the same period. Based on this observation, you can expect the crypto space to enter a similar phase, with investor attention shifting to altcoins, and many alternatives to BTC outperforming the original cryptocurrency.

The Bottom Line

Bitcoin has hit a significant milestone, but that’s not the only thing you should pay attention to. As an investor, you should start considering shifting your attention to altcoins like Solana and Ethereum for a very valid reason: their value and market share are likely to increase. After a Bitcoin ATH stint, alternative cryptocurrencies often enjoy success as investors look for other sources of high returns. Consider diversifying your portfolio with the most promising crypto, and conduct extensive research before putting your money on the line.