• Bitcoin dominance likely needs to reach between 62% and 70% for an altcoin season to commence.
• However, additional issues across various metrics also require serious consideration.

Market sentiment was generally bearish for altcoins in Q3, with Bitcoin [BTC] dominance rising to around 57%, recording a new all-time high. The Altcoin Season Index currently reads 35, after hitting its lowest-point in mid-August.

Typically, altcoins tend to perform well after Bitcoin dominance peaks. As Bitcoin captures market share early in a cycle, capital often shifts to altcoins once BTC dominance begins to fade. This cycle benefits altcoins, as investors seek higher-risk, higher-reward assets.

From a statistical standpoint, Bitcoin’s market cap would need to grow by approximately $280 billion to fall within the 62%-70% range for an altcoin season to kickstart. This growth is likely to occur when BTC hits $80K, among various other metrics.

High Bitcoin dominance is crucial

Over time, Bitcoin’s dominance has significantly declined, dropping from 90% in 2013 – when the market was still in its infancy – to a low of 39% in 2021, as altcoins began to gain traction.

Notably, each altcoin season has been driven by specific catalysts, like the launch of new cryptocurrencies, technological innovations such as ERC-20 tokens, and broader trends like DeFi and NFTs.

This suggests that beyond Bitcoin’s market share, individual contributions from altcoins will also play a critical role in sparking the next altcoin season.

Currently, altcoin market standings are too limited to drive a season independently, as altcoin losses often rely on Bitcoin’s returns for stability. For a shift to occur, Bitcoin would likely need to lead with an initial rise.

This trend suggests Bitcoin’s price may need to exceed $80,000 to achieve a BTC dominance above 65%, which could trigger substantial capital inflows into the altcoin market.

Need for high risk appetite

In a recent report, AMBCrypto highlighted an emerging shift in the altcoin market, calling for strategic measures from Ethereum developers to counter growing competition.

Internally, this demands careful assessment, while externally, Bitcoin’s appeal suffers from a widening risk deficit, indirectly hampering altcoins from receiving their due momentum.

As gold prices reach new highs, driven by interest rate cuts and geopolitical tensions, Bitcoin’s stagnant performance underscores limited market risk appetite for crypto.

Historically, an upward trend in the BTC/Gold ratio has been aligned with altcoin season. Therefore, the current decline in risk appetite negatively impacts altcoin performance, indicating that a rising BTC/Gold ratio could serve as a signal for more favorable conditions ahead.

In short, as BTC undergoes a pullback, the declining BTC/Gold ratio reflects a shift of investors toward perceived safe-haven assets, which undermines Bitcoin’s appeal as a long-term store of value. 

This migration underlines the importance of market confidence in BTC’s role as a “digital gold” to support a broader altcoin rally – a rally likely to stabilize once BTC approaches the $80K mark.

Less ETF driven momentum

Another factor is the relationship between Bitcoin’s price surge and ETFs. While ETF-driven rallies are generally positive, the impact on altcoins can vary. The ETF market has experienced significant growth in 2024.

However, when ETFs lead market momentum, funds tend to remain within Bitcoin or Ether rather than rotating into altcoins, as mainstream investors often have limited direct access to them. Instead, capital is likely to flow into crypto-related stocks.

Read Bitcoin’s [BTC] Price Prediction 2024-25

As a result, a blend of internal and external factors continues to postpone the onset of altcoin season, which remains closely tied to Bitcoin’s price performance.

For altcoin season to materialize, Bitcoin would likely need to surpass $80K, a threshold that, given current dynamics, may be challenging to reach by the end of Q4.