Bitcoin’s market dominance has slipped to multi-week lows, flashing bearish signals as traders brace for potential altcoin rallies and further downside risks. The leading cryptocurrency’s share of the total crypto market cap dropped to 46.32% this week, marking a 23% decline from January’s peak price of $109,350. Analysts identified a double bearish divergence in Bitcoin dominance charts, suggesting weakening momentum despite neutral Relative Strength Index (RSI) readings.
The downturn follows a $1.1 billion single-day outflow from Bitcoin ETFs on February 25, the largest withdrawal since their January launch. Bitcoin slid to $83,740 this week, erasing over $1 trillion in market value since late January. Standard Chartered’s Geoff Kendrick warned that “the big capitulation is yet to come,” pointing to mounting liquidation risks as futures market positions approach critical thresholds. Political turbulence and a major exchange hack exacerbated selling pressure, with Trump-era tariff policies contributing to February’s $420 billion crypto market wipeout.
As Bitcoin falters, altcoins show signs of resurgence. Ethereum climbed 3.1% to $3,456 this week while high-cap alternatives like Cardano and Solana posted 3-4% gains. Technical analysts observed a bearish pennant pattern in Bitcoin dominance charts, a structure that previously preceded altcoin rallies in late 2024. “When dominance breaks below 45%, we could see capital flood into undervalued altcoins,” noted market strategist Crypto Rover.
Market participants remain divided on whether this marks the start of altcoin season or a broader crypto downturn. The Crypto Fear & Greed Index hovered near “extreme fear” levels, though derivatives data shows traders maintaining disproportionate long positions. With $12.3 billion in daily altcoin trading volume entering the market, analysts caution that Bitcoin’s dominance slide could trigger cascading liquidations if prices break below key support at $80,000.
Sources:
https://www.ainvest.com/news/bitcoin-dominance-flashes-bearish-signal-altcoins-rally-market-turmoil-2502/
Bitcoin has tipped into a bear market, slipping 23% from January highs
https://blockchain.news/flashnews/bitcoin-dominance-shows-double-bearish-divergence
https://blockchain.news/flashnews/bitcoin-dominance-shows-bearish-pennant-indicating-potential-altcoin-rally
