Bitcoin could enter new bull market if this happens: CryptoQuant

Bitcoin (BTC) posted significant gains recently, but that doesn’t mean the market is ready for a full bull run.

Chain patterns analyzed by CryptoQuant author Quicktake Woominkyu show that previous bull markets have begun while Bitcoin witnessed a decline in market share dominance. Unfortunately, now the opposite is happening.

Diversification of investment capital

According to Woominkyu, a decline in Bitcoin dominance indicates that investors are diversifying their funds into alternative currencies (altcoins), other cryptocurrencies in addition to BTC. In other words, the market needs to experience an altcoin season before BTC can have its bull run.

As investors’ capital moves from BTC to altcoins, the broader market can witness a major rally that would trigger a bull run. Woominkyu said BTC could witness a new bull run if its dominance wanes.

“Looking at this chart, we can see that, historically, major market-wide bull runs have coincided with the decline of Bitcoin’s dominance. If this pattern repeats itself, we could foresee the start of a new crypto bull market as that diminishes Bitcoin’s dominance,” the analyst said.

Bitcoin’s dominance is rising

Over the past week, Bitcoin’s dominance has been on the rise. Data from CoinGecko shows that the leading cryptocurrency accounted for 54.7% of the total market share on October 24. However, at the time of writing on November 1, the share had risen to 58.2%.

The last time Bitcoin’s dominance rose to this level was during a brief surge to 64.8% on August 5, shortly before the yen-dollar crisis that saw the crypto market bleed millions . March 2021, during the last bull cycle, saw a more sustainable rise in Bitcoin dominance. The asset’s market share had remained above 60% for about six months earlier.

Based on Woominkyu’s analysis, BTC’s dominance should fall before the asset can witness another bull run. However, this may take a while because the Bitcoin network is seeing a huge influx of capital.

The launch of spot Bitcoin exchange-traded funds (ETFs) in the United States and several other markets paved the way for investors and traditional financial institutions to gain access to the world’s largest blockchain network. These funds, particularly US ETFs, have seen large inflows since October. This persistent capital flow has also pushed the price of BTC above $73,000 for the first time since March.

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