Bitcoin dominance has continued its upward trajectory, currently sitting at 58.8% — a significant climb from December's low of 51% — marking the highest level since early 2021.

This metric, which measures Bitcoin's market capitalization relative to the total market capitalization of all crypto assets, has steadily increased despite some expectations of a potential alt season. A popular thesis among traders is that Bitcoin's dominance would decline as the market cycle matured, typically signaling a rotation of capital into altcoins.

Many crypto investors have been anticipating the so-called "alt season" — a period when altcoins outperform Bitcoin, sometimes delivering outsized returns compared to the market leader. Historically, alt seasons tend to follow Bitcoin rallies, as traders take profits from Bitcoin and redeploy capital into higher-risk, potentially higher-reward altcoins. Despite favorable conditions that traditionally spark alt seasons (Bitcoin stability, increased market liquidity, institutional adoption), this rotation hasn't materialized in the expected fashion.

Several factors have supported Bitcoin's continued dominance in this cycle. Corporate accumulation strategies, particularly from Strategy, which has consistently raised capital specifically to acquire more Bitcoin, creating persistent buying pressure. The proliferation of new tokens has vastly exceeded previous market cycles, potentially diluting capital that would otherwise flow to established altcoins. Spot Bitcoin ETFs have created a direct avenue for traditional finance capital that remains largely absent for most altcoins.

Some expected the Ethereum ETF approval last summer to chip away at Bitcoin's dominance, but the impact has been relatively muted compared to predictions. While ETH ETFs saw strong initial inflows, they haven't catalyzed the broader altcoin market as many anticipated.

The alt season thesis might not be invalidated but merely delayed, with potential catalysts still on the horizon that could trigger a rotation into altcoins.

This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

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