Crypto Market Trends: Analysis of Bitcoin Dominance Peaking and the Possibility of the "Alt Season" Coming

The global market is fluctuating under the influence of liquidity and sentiment. Signs of recession risks have appeared in the soft data of the US economy, while Bitcoin seems to be brewing new highs, and the market also seems to sense the breath of the "alt season" approaching. This article will analyze the current market situation from the perspective of data indicators and explore the possibility of Bitcoin's dominance potentially peaking and the arrival of the "alt season."

Macroeconomic Situation

changes in tariff policy

The global effective tariff rate is currently 17.8%, much higher than the 2.5% of a few years ago. Although there have recently been some restrictions on tariffs against China with a 90-day suspension period, it is unlikely that the tariff rate will return to the previous low levels in the long term. The purpose of the tariff policy is to rebalance trade relations with China while meeting some political demands.

risk of economic recession

Recent soft data shows that the risk of economic recession has increased.

• The ISM Manufacturing Index fell to 48.7 in April, indicating a contraction in the business cycle.
• The University of Michigan Consumer Confidence Index in April was only 52.2, far below the long-term average.
• The number of layoffs in March reached a new high in recent years.
• Port data shows a significant decrease in freight volume from China.

However, the 90-day tariff suspension may temporarily alleviate concerns about a short-term recession. The current market is more suitable for short-term traders, but there may also be a window of rising risk appetite, attracting capital allocators to chase the market.

Cryptocurrency Market Trends

The crypto market is most sensitive to changes in liquidity conditions, and it currently seems to be reflecting the following trends:

1. The U.S. government's fiscal expenditure remains high.
2. Government and corporate debt face large-scale refinancing.
3. Possible tax cuts and regulatory easing measures
4. The decline in inflation creates conditions for the Federal Reserve to cut interest rates.

These factors combined have created favorable conditions for the arrival of "alt season". Recently, we have observed that altcoins and Meme coins have continued to rise, while Bitcoin's dominance seems to have peaked.

The key factors of "alt season"

The key factors to determine whether the "alt season" has arrived include:

• In the last year of the cryptocurrency cycle
• Bitcoin's dominance is around 65-70%
• The monetary policy shifts from quantitative tightening to quantitative easing.
• ETH/BTC ratio rises
• Increasing interest from retail investors and the resurgence of "Meme" coins

Currently, we may be in the early stages of this process. The ETH/BTC ratio is still relatively low, the price of ETH is still a certain distance from its historical high, and the Federal Reserve is still implementing quantitative tightening policies.

Investment Strategy Recommendations

Considering the current market situation, here are some investment strategy suggestions:

1. Maintain a cautious attitude towards the current price of Bitcoin.
2. Redistribute part of the profits to higher-risk assets
3. Pay attention to tokens with strong communities and scarcity.
4. Focus on fundamentally strong DeFi projects and top "blue-chip" Meme coins

It is important to note that this is not a full-throttle strategy, but rather an approach to capture some upward potential during a strong rebound in the market.

Risk Factors

Investors need to be aware of the following risks:

• Can Bitcoin break through its historical high?
• The summer market may experience volatility or consolidation.
• The rise in long-term bond yields may affect valuations.
• The slow progress of legislation related to cryptocurrency could become a headwind for the industry.

Conclusion

"alt season" typically refers to over 50% of new funds in the crypto market flowing into non-Bitcoin assets. However, this does not mean that all altcoins will perform excellently. Asset selection and timing are crucial.

In addition to market risks, investors should also be wary of additional risks such as hacker attacks, hidden leverage, and social engineering scams. There may be opportunities in the future to purchase Bitcoin and other quality assets at discounted prices, but there are also potential opportunities to capture upward movement in the market currently.