Will Bitcoin’s dominance tip the scales in an altcoin boom?
On December 21st, when the price of Bitcoin (BTC) dropped to $44,000, Solana (SOL) and Avalanche (AVAX) led the price among large-cap altcoins. The stable bullish momentum in altcoins comes with Bitcoin price failing to secure the $45,000 level, which has stood as resistance since its initial high on December 5.
Standing at $45,000 as the current resistance level, the dominance of the Bitcoin market began to pull back from 53.95% to 53.17% and as shown in the chart below, the dominance of the altcoin market (TOTAL2) increased at the same time.
Traders using technical analysis see a combination of Bitcoin's decline in dominance and BTC range-related trading or price consolidation as a sign that the altcoin's price may rise.
In addition, looking at the interaction between the US Dollar Index (DXY) and BTC price is a sentiment gauge often cited by technical traders. Currently, DXY is down 1.56% for the month, while the price of Bitcoin is holding a 16.18% gain over the same period.
Many traders believe that the DXY's reversal is mainly influenced by comments from the recent Federal Reserve Chairman Jerome Powell and the FOMC minutes, which suggest the possibility of three interest rate cuts in 2024.
Somewhere in Q1 2024, waiting for the approval of the Bitcoin ETF and with the market's belief that the Fed's interest rate hike regime has ended, the general sentiment of crypto assets has been bordering on euphoria.
Related: Bitcoin Traders See $48K BTC Price Ahead of ETF ‘News Sell' Event
Solana and Avalanche have reached the peak for the new 2023
According to Cointelegraph analyst Marcel Pechman, a handful of network-related and technical factors are driving the price of SOL closer to $100. On December 20, SOL surpassed XRP by market capitalization to rank as the fourth largest cryptocurrency excluding stablecoins.
A significant factor contributing to this increase is the improved user experience on Solana, particularly the launch of tokens and non-fungible tokens (NFT). The network's focus on mobile accessibility, emphasized by its mobile platform @solanamobile, is attracting new users who prioritize ease of use over other issues such as decentralization. This user-friendly approach, combined with Solana's ability to handle high-capacity projects and its low transaction costs, make it a strong contender in the cryptocurrency market, especially with Ethereum, which is under pressure due to these developments.
The current SOL price rally is led in part by the excitement surrounding the airdrops, the newly launched SPL token JITO's listing on major exchanges and its success, with a market capitalization of over $300 million shortly after trading. In addition to these factors, SOL's recent growth is fueled by the growth of decentralized applications (DApps) on the Solana network.
In three weeks, the total value (TVL) locked in Solana increased from $654 million to $1.28 billion, an increase of 96%. This growth outpaced competitors, with a significant increase in the number of unique active addresses connecting to Solana DApps.
Similar trends are being observed in the Avalanche ecosystem, with a significant increase in DApp users, various DeFi protocol incentives and constant rumors of airdrops leading to revenue streams, daily active users and an increase in AVAX value.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
