- Bitcoin market cap has risen 80%, hitting $28k due to liquidity injection by Federal Reserve.
- Altcoins remain 90% below their historical highs, offering traders and investors potential opportunities.
- Bitcoin and gold are becoming haven assets, with Bitcoin dominance facing significant resistance.
Since November 2022, Bitcoin has experienced a significant increase of approximately 80% in its market capitalization, reaching the $28,000 threshold. The primary impetus for this upward trend began on March 10, following the Federal Reserve’s announcement of an additional liquidity injection aimed at stabilizing the banking system.
Despite the surge in Bitcoin, a considerable number of altcoins remain 90% below their historical highs, offering traders and investors promising prospects in the weeks to come.
The creation of cryptocurrency by the mysterious Satoshi Nakamoto aimed to decentralize financial transactions and return control to ordinary people. Bitcoin was created in response to the 2008 Great Financial Crisis, highlighting the fragility of the modern financial system.
However, the banking system failed again after 15 years, with major banks like Credit Suisse, Silvergate Bank, and Silicon Valley Bank going bankrupt. Moreover, analysts predict that 186 more US banks may also face similar issues soon. Cryptocurrencies offer a promising alternative to bank deposits, particularly with the US government’s printing of fiat currency leading to high inflation rates.
Moreover, bailing out banks by injecting additional liquidity may only worsen the situation, highlighting the vulnerability of the fiat financial system. In this context, gold and Bitcoin are becoming haven assets, with investors looking to save their capital. Additionally, the global rally is expected to continue.
Typically, altcoin prices tend to lag behind the primary cryptocurrency due to investors’ overwhelming focus on Bitcoin. When news hits the market, investors initially boost the BTC/USD. However, as the price of Bitcoin rises, they take profits and allocate funds to other crypto projects.
Currently, the market is experiencing the Bitcoin season, where Bitcoin’s capitalization is growing at a faster pace than other cryptocurrencies. For instance, between March 10, 2023, and today, Bitcoin has gained 45%, while Ethereum has increased by only 31%. The altcoin season index fluctuates between 0 and 100, and its current value stands at 25. As a result, altcoin capitalization is expected to outpace Bitcoin in the near future.
Another crucial metric to consider is Bitcoin Dominance (BTC.D). The price has reached a significant resistance level and exhibited a noticeable reaction. Further decline would imply the dominance of altcoins over Bitcoin.
The potential targets for altcoins excluding BTC and ETH prices have also broken through the descending trendline and undergone a double test. It is moving towards the resistance zone at around $450 billion, with a potential gain of 20%. If the price surpasses this barrier, it may surge toward the $630 billion market cap level, representing a 62% increase from the current level.