The ongoing war between Israel and Iran is weighing heavily on the cryptocurrency market. Consequently, the chances of a soon-to-arrive altcoin season are fading fast. Geopolitical tensions are on the rise, pushing investors toward safe-haven assets like Bitcoin. This drastic change has led to a major Bitcoin dominance wave, with altcoins having a hard time keeping pace. Short-term investor sentiment has turned 180 degrees. Let’s take a look at some key market indicators that suggest the altcoin rally everyone’s expecting could be postponed.
Bitcoin Dominance Climbs Amidst Conflict
Ever since Israel began a large-scale operation against Iran on June 13, Bitcoin dominance has skyrocketed. This metric measures Bitcoin’s market cap relative to the total crypto market and emphasizes Bitcoin’s increasing dominance. Bitcoin dominance is at 65.30% at the time of writing. It did hit a multi-year high of 65.95% on Sunday before retreating to its current level. This sharp increase trend marks that while looking for a safe haven, investors are running towards Bitcoin during the current global geopolitical crisis.
"BTC.D indicates Bitcoin dominance versus altcoins, and it has been rising since the conflict began." - Agne Linge
OMG Bitcoin dominance is up to 85%! This is so even as Bitcoin’s price has been largely stagnant, unable to maintain anything north of $70,000. Understandably enough, investors are in a very safety-first frame of mind. They would rather have the stability of Bitcoin than pursue the higher risk, higher reward potential offered by altcoins.
Altcoins Underperform as Capital Flows to Bitcoin
With BTC dominance increasing, the altcoin market is suffering from the same effects of the Bitcoin dump. The Ethereum alternative altcoin market cap is overall at like 230.71 billion dollars, excluding the top 10 coins. It’s since lost $12 billion in just ten days. The drop in altcoin actor’s performance coincides with the escalation of the Israel-Iran conflict. This correlation further exemplifies how real-world geopolitical instability can have a direct effect on altcoin prices.
"The altcoin market cap, excluding the top 10 coins, dropped immediately when the conflict started escalating. That means that the traders were rotating their capital allocation from altcoins to safer haven coins such as Bitcoin and stablecoins." - Agne Linge
The OTHERS index, which tracks the altcoin market share, is currently at $230.08 billion. This number highlights just how hard altcoins continue to hit all-time highs against BTC in today’s market climate. Since then, June 16 ETH/BTC ratio has decreased and remained relatively flat. That’s a bad sign considering Ethereum has been the underlying base for the vast majority of other altcoins and is almost always outperforming Bitcoin on days when altcoins are rallying.
"ETH/BTC ratio is also an important indicator, since the majority of altcoins are based on the Ethereum blockchain, and the rising ratio means that Ethereum is outperforming BTC. The ratio has fallen since June 16 and has remained stagnant." - Agne Linge
Altcoin Season Delayed
Looking at today’s bullish market trends, the highly anticipated altcoin season might still be premature. An altcoin season typically commences when at least 75% of the top 50 altcoins outperform Bitcoin over a 90-day period. Bitcoin dominance remains unsurprisingly high as altcoins continue to flounder beneath the surface. Therefore, the right conditions for an altcoin season to happen have not formed just yet.
"Typically, during global conflicts that affect political and macroeconomic stability, investors tend to shift their capital from risky assets to those perceived as safe havens." - Agne Linge
The percentage of Bitcoin’s dominance ratio has been at a standstill since June 16. Investors have already remained on the sidelines for so long. They would like to park in Bitcoin or stablecoins until we get through the geopolitical uncertainty.
