Analysts see altcoins gaining momentum and a bullish market in Q4
A recent report from Bitfinex suggests a potential shift in cryptocurrency market dynamics, with altcoins possibly outperforming Bitcoin (CRYPTO:BTC) in the coming months.
According to the Bitfinex Alpha report released on Monday, analysts noted a decrease in Bitcoin's market dominance and an increase in altcoin market capitalisation, signaling a potential change in investor behavior.
Bitfinex analysts highlighted that during a recent market sell-off, Bitcoin's dominance, which measures its market capitalisation compared to the rest of the crypto market, dropped by 1.3%.
Meanwhile, the market capitalisation of all other cryptocurrencies, excluding the top 10, rose by 4.4%.
The report stated, "Dare we say it, but the shift hints at a potential regime change where investors are exploring value in altcoins, diverging from the typical pattern of flocking to Bitcoin."
The report further emphasised that altcoin open interest has dropped by 55% from its all-time high, suggesting a decline in speculative activity and potential seller exhaustion.
The ETH/BTC ratio, which remains below its 365-day Simple Moving Average, indicates that Ethereum (CRYPTO:ETH) has underperformed relative to Bitcoin since the Merge.
However, the reduced open interest could signal an upcoming period of recovery for altcoins.
"If bitcoin dominance has indeed reached a local top, we may see a period of altcoin outperformance in the coming months," the report noted.
This outlook for a bullish fourth quarter hinges on several factors, including easing inflation, improved macroeconomic conditions, and a reduction in exchange-traded fund (ETF) outflows from Bitcoin.
At the time of writing, the Bitcoin (BTC) price is $57,808.56.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
UK to Roll Out Comprehensive Crypto Regulations by 2026
Bitcoin’s history of bull market drawdowns
The most brutal drawdowns have historically happened at the tail end of bull runs
Base sees record 106 TPS as total value locked crosses $10B
Crosschain swaps without bridges: Here’s how it works