Seventy percent of hedge fund managers anticipate a rise in Bitcoin dominance, tripling from last year. This expected dominance increase is attributed to Bitcoin’s perceived safety during economic uncertainty, growing institutional interest due to regulatory clarity, and underwhelming altcoin performance. Nonetheless, some experts believe an altcoin season could still occur as capital becomes selective, promoting quality projects.
Hedge funds predict an increase in Bitcoin’s market dominance over the next six months, with 70% of managers believing it will rise significantly. This figure has tripled from the previous year, indicating strong confidence among investors. According to a report by Crypto Insights Group, which surveyed 50 hedge fund managers overseeing over $5 billion, the expectation is that Bitcoin will decouple from other cryptocurrencies, which may hinder the anticipated altcoin season.
Bitcoin currently makes up over 61% of the total $3 trillion cryptocurrency market. Hedge fund managers suggest that this expected rise in dominance challenges analysts who anticipated a robust altcoin season by the end of 2024. The “altseason” refers to periods when non-Bitcoin cryptocurrencies experience increased interest and price surges.
Managers cite three main reasons for Bitcoin’s anticipated dominance. Firstly, Bitcoin’s strong performance amidst macroeconomic uncertainty, particularly during the US-China trade war, positions it as a safer investment compared to more speculative altcoins. Recent events have seen Bitcoin rising by 11% to $93,500, suggesting a possible decoupling and increased perception of Bitcoin as akin to a safe haven asset.
Secondly, growing regulatory clarity, such as the approval of Bitcoin exchange-traded funds and the establishment of a US strategic Bitcoin reserve, is attracting institutional investment. However, hedge fund managers argue that this regulatory environment does not extend similar confidence to altcoins.
Lastly, the majority of altcoins have underperformed relative to Bitcoin, with only select tokens like XRP and Solana witnessing price increases. This has led investors to favour Bitcoin, thereby further driving its value.
Despite these trends, some industry stakeholders remain optimistic about the possibility of an altcoin season. Andy Martinez, CEO of Crypto Insights Group, emphasises that a higher Bitcoin weighting does not necessarily eliminate the potential for altseason. He points out that investment capital is becoming more selective, focusing on projects with proven financials rather than just new offerings.
Moreover, significant factors like stablecoin growth and on-chain credit dynamics suggest that a complete decoupling of Bitcoin from the broader cryptocurrency ecosystem is improbable.
