Will Bitcoin soon "suck dry" Altcoin?

The dominance ratio of Bitcoin (BTC.D) is rising again, after a period of adjustment over the past few weeks. The latest data shows that this index has bounced back to 58.05%, strongly rebounding from the long-term trend line maintained since the beginning of 2023.

This momentum raises concerns that the recent growth of altcoins may soon come to an end, especially as Bitcoin once again attracts a flow of capital back.

Warning from analysts: Altcoin may have reached summer peak

Analyst Benjamin Cowen predicted last week that Bitcoin's dominance is likely to continue increasing in September and October. According to him, altcoins often peak against BTC at the end of August before ceding their position back to the "king" in the final months of the year.

"Money will flow into the king's pocket," Cowen emphasized.

He also reminded that in many previous summers, the market has witnessed a similar pattern: altcoins surged briefly in August, then gradually weakened as Bitcoin bounced back strongly in Q3 and Q4. Cowen predicts that the dominance rate of BTC could climb to the threshold of 61–63%, putting significant pressure on altcoins, especially if Ethereum – the leading coin in the recent altcoin rally – enters the resistance zone and slows down.

Although the long term outlook supports the bounce back of Bitcoin, Cowen notes that in the short term, BTC.D may still be considered to be in an overbought state. He believes there is still a scenario where BTC.D could drop to 52%, but this is unlikely to happen soon and may have to wait until the end of the year.

The recent trend of shifting to altcoins has largely been driven by Ethereum. However, if ETH fails to break through key resistance levels, the trend of reverting back to Bitcoin may occur faster, extending into the end of Q3.

Bitcoin price remains stable, the market is watching important milestones.

At the time of writing, Bitcoin is trading at 113,208 USD, up 1% on the day but still down 1% on the week. Veteran trader Peter Brandt warns of a large sell-off this weekend, which may reflect supply pressure or distribution activity in the market.

He noted that BTC needs to quickly reclaim the 117,570 USD mark to avoid forming a "double top" pattern – a signal that could be detrimental to the upward trend. He emphasized:

"Most of you "crypto geeks" have heard about the massive sell order in the BTC market last weekend. Some people consider this unimportant, but I am not in a hurry to judge that way. This sell order reflects the actual supply in the market."

As seasoned analysts know, market tops are often formed by supply or distribution. Bitcoin needs to regain the level of 117,570 USD for the past 7 weeks not to be considered a potential double top formation.

This article does not mean that I am leaning towards the bear or bull side. This is important information because many people do not recognize the subtle details in the market.

The strong increase of Bitcoin's dominance index to 58.05% is reinforcing the view that the market is gradually turning back to BTC. Meanwhile, altcoins are starting to stagnate, facing the risk of weakening in the coming weeks if the dominance scenario of 61-63% becomes a reality.

With this trend, Q3 may witness a rebalancing of capital flows, where Bitcoin continues to play a central role, while altcoins temporarily take a step back after a vibrant summer.

Lilly