Altcoin Market Dominance Reaches 50%: Another Imminent Crypto Crash?

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The current spike in alternative cryptocurrency trading has resulted in the dominance of the altcoin market, which refers to the percentage of the cryptocurrency market comprised of altcoins (non-Bitcoin cryptocurrencies), to reach 50%. The community at large is excited about this trend, but some experts are already predicting that it could lead to a collapse in the near future.

Warning: a crash is coming!

According to JA Maartun, crypto analyst and community manager for CryptoQuant, the fact that the trading dominance of altcoins has reached 50% is quite concerning. See Maartun’s table below:

Cryptoquant

Maartun presented the graph above to support his claim that in the past, when the share of altcoins in trading volume exceeded 50%, a significant drop in the price of BTC often led to a similar drop in value on d other markets.

The chart shows that the November 2022 decline in value was preceded by a period of increasing altcoin dominance, with alternative cryptocurrencies accounting for 55% of total trading volume.

This came at a time when market sentiment was already negative and many investors were hesitant to commit to risky assets, despite evidence of crypto investments expected in 2023.

Conclusion

US Consumer Price Index (CPI) data is set to be released on January 12, and some experts predict it will show rising inflation. If so, the Federal Reserve may continue to raise interest rates, which has already caused the market capitalization of cryptocurrencies to decline.

If future increases in interest rates are combined with the current negative market attitude, DCG’s potential for bankruptcy and reduced market liquidity, this could lead to another collapse not only of the altcoin market, but also from the overall cryptocurrency market.

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