- As the leading altcoin, Ethereum’s performance against Bitcoin was an eyesore and a discouragement for investors.
- The rising Bitcoin Dominance trend meant that the king of crypto was where most of the capital was still headed.
As the largest altcoin in the market, Ethereum [ETH] has the potential to swing investor sentiment toward the altcoin market.
Yet, it has been in a severe downtrend since January, losing 56.6% since January’s high at $3,744. The falling network activity and fees reinforced this bearish outlook.
Source: ETH/BTC on TradingView
The ETH/BTC was near the summer 2019 levels. It was hoped that the late 2020 level would halt the bearish progress, but that has not been the case. Further losses for ETH/BTC were likely, as confidence in Ethereum was low.
This was not good news for the rest of the altcoin market. Was it a sign that the altcoin market would struggle to keep pace with Bitcoin [BTC], too?
Should investors hope for sustained altcoin gains?
Source: TOTAL3 on TradingView
The altcoin market appeared to recover brightly over the past two weeks. The TOTAL3 was the altcoin market cap, but excluding Ethereum. It fell below $750 billion in the first week of April, but has nearly climbed back above this level since then.
However, it was still in a bearish trend. The recent lower high at $780 billion, as well as the swing high set in March at $853 billion, must be surpassed before altcoins can be said to show long-term strength.
At press time, the altcoin season index was at 20, indicating it was Bitcoin Season. If 75% of the top 50 crypto assets performed better than BTC over the past ninety days, it can be considered alt season.
The market was a long way from this situation.
Source: BTC.D on TradingView
The Bitcoin Dominance (BTC.D) tracks the share of BTC’s market cap against the entire crypto market cap. Its rising trend over the past two years was a sign that altcoins have bled against BTC. The most notable example would be ETH/BTC, as seen earlier.
The BTC.D was above 63.8%, a level that had been a support back in early 2020, and was flipped to resistance in 2021. Therefore, with this level flipped to support once again, the BTC.D was set to rise higher.
Investors who were hopeful of an altcoin market rally based on the gains some tokens saw over the past two weeks should remain cautious. Even if the short-term outlook was bullish, long-term forces were at work that would make any sizable altcoin rally hard to achieve.
