Bitcoin may enter bull market If dominance declines

CryptoQuant’s analysis indicates that Bitcoin (CRYPTO:BTC) may not be entering a new bull market, as its dominance in the cryptocurrency market is currently rising rather than falling.

Despite recent significant gains in Bitcoin's price, this does not necessarily signal the onset of a full bull run.

On-chain patterns examined by CryptoQuant analyst Woominkyu reveal that previous bull markets typically began when Bitcoin experienced a decline in market share dominance. 

Woominkyu explains that a decrease in Bitcoin’s dominance suggests that investors are diversifying their capital into alternative coins (altcoins), which are cryptocurrencies other than BTC. 

For Bitcoin to initiate a bull run, the market must first experience an altcoin season.

When investor capital shifts from Bitcoin to altcoins, it can lead to a broader market rally that might trigger a bull run for Bitcoin.

“Looking at this chart, we can see that, historically, major bull runs across the market have coincided with declines in Bitcoin dominance. If this pattern repeats, we might anticipate the beginning of a new crypto bull market as Bitcoin dominance decreases,” Woominkyu stated.

In recent days, Bitcoin’s dominance has been on the rise. 

Data from CoinGecko shows that as of October 24, Bitcoin accounted for 54.7% of the total market share, but by November 1, this figure had increased to 58.2%.

The last time Bitcoin’s dominance reached such levels was during a brief spike to 64.8% on August 5, just before a significant downturn in the crypto market.

A more stable rise in Bitcoin’s dominance was observed in March 2021 during the last bull cycle when its market share remained above 60% for about six months.

According to Woominkyu’s analysis, BTC’s dominance would need to decline for the asset to witness another bull run.

However, this decline may take time as the Bitcoin network is currently experiencing substantial capital inflows.

The launch of spot Bitcoin exchange-traded funds (ETFs) in the United States and other markets has provided traditional finance investors and institutions with access to Bitcoin. 

These funds have seen significant inflows since October, contributing to BTC's price rising above $73,000 for the first time since March.

At the time of reporting, the Bitcoin (BTC) price was $69,447.49.