A new metric shows Bitcoin (BTC) is taking a step back against a basket of other proof-of-work coins and tokens. The direction of the Bitcoin dominance metric may signal both a market peak and the ability of altcoins to outperform.
The real Bitcoin dominance metric is a new metric introduced to measure BTC against a basket of mined coins. The metric excludes ICO tokens and other assets, removing the distortion of the tokenized economy.
The index also excludes stablecoins, which do not reflect the true value of other coins. Removing the stablecoin supply and random outperforming tokens serves to give a clearer index of the direction of BTC and the rest of the market.
The Bitbo index includes some legacy coins, which aim to be hard or deflationary money. BTC usually has a higher dominance against this group of assets. However, it also sends a clear signal when shifting direction.
The basket of hard money coins and tokens, most of which use a form of mining, include LTC, BSV, BCH, XMR, DASH, ZEC, BTG, ETC, DCR, XRP, SOL, and TRX. The list also counts Ethereum (ETH), despite it no longer being mined. While inexact, the true BTC dominance index is yet another tool for gauging the BTC price cycle.
The metric showed the peak of BTC dominance around November 20, following a month-long expansion. Peak BTC dominance is seen as the signal for an upcoming altcoin market, as funds seek out more active gains.
This time around, the real BTC dominance shrank from a peak above 74% down to 69.7%. At the same time, the index drew attention to other mined coins and tokens, which attempted to break out since early November.
Are mined coins still viable?
Mined coins have a varied profile, including a series of older privacy coins. Mining is still a highly competitive activity, and even smaller networks have gained from a more industrial approach to mining.
Dogecoin (DOGE) is one of the most successful mined coins, along with Bitcoin. DOGE is in the top 10, but its success lies more in its meme potential, rather than mining. DOGE mining still depends on the Litecoin hashrate, and it is rare for new DOGE buyers to be interested in mining.
Recently, Verge (XVG), an early-stage mined coin, broke out from its lows. XVG rallied from $0.004 to $0.017, returning to 2021 levels after three years of stagnation.
BCH, while highly liquid and with wide adoption, still lags at $532, with relatively small breakouts in 2024. LTC is performing similarly, for now lagging around $120 despite expectations of an irrational rally to a higher range. At the same time, LTC remains viable for being one of the most widely transacted assets.
Is the altcoin season still viable?
The shift in BTC dominance is supposed to signal the altcoin season. However, the recent performance of most assets suggests the rally has stalled and is returning to sideways trading and accumulation.
The altcoin season index fell from a peak above 89 points down to 67 points, suggesting BTC is still the leading narrative.
Based on the buying signal, BTC is near its peak, but altcoins are also a more uncertain bet. While the crypto market is more liquid than ever, sentiment is also shifting and some of the legacy coins and tokens do not rally as hard as expected.
There is currently no consensus on the exact parameters of the altcoin season. Some predictions see the rallies continuing into Q1 2025. For others, the meme supercycle and the Solana ecosystem have absorbed the attention and funds previously going into altcoins.
However, mining assets have also shown they are uniquely capable of surviving in the long term. With support from large pools, those coins are rarely phased out, and cannot be easily replaced by newly created tokens.
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