Bitfinex’s analysts anticipate a potential shift in cryptocurrency market dynamics. With bitcoin’s dominance decreasing and altcoins showing resilience, they suggested that altcoins could outperform bitcoin in the coming months, especially if macroeconomic conditions improve. They discussed altcoin market capitalization growth, bitcoin’s declining dominance, and speculative exhaustion in altcoins as key indicators of this trend.

Analysts Expect Altcoin Outperformance in Late 2024

The Bitfinex Alpha report, released on Monday, offers some predictions about the potential performance of the cryptocurrency market, particularly regarding altcoins. As bitcoin’s dominance declines and altcoins show resilience, the report suggests a potential shift in market dynamics.

“As the sell-off took hold last week, bitcoin dominance, which measures the market capitalization of BTC against the rest of the crypto market decreased by 1.3 percent. In comparison, the market cap of all other crypto assets (excluding the top 10) increased by 4.4 percent,” Bitfinex’s analysts explained, asserting:

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 analysts further detailed that altcoin open interest has declined by 55% from its all-time high, signaling reduced speculation and possible seller exhaustion. The ETH/BTC ratio remains below its 365-day Simple Moving Average, indicating broader underperformance of ETH since the Merge.

The report adds:

If bitcoin dominance has indeed reached a local top, we may see a period of altcoin outperformance in the coming months, potentially setting the stage for a bullish Q4 should macroeconomic pressures ease.

The forecast is reinforced by a 55% drop in altcoin open interest, suggesting seller exhaustion. Although the ETH/BTC ratio remains below its 365-day Simple Moving Average, highlighting Ethereum’s underperformance, altcoins could still rally. This outlook depends on factors like easing inflation, improved macroeconomic data, and reduced exchange-traded fund (ETF) outflows from bitcoin.

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