Summary
- In the last week, Bitcoin's price has surged approximately 24% to nearly $79,000, marking its strongest performance since 2023, while altcoins lagged behind even during Bitcoin's rally.
- Bitcoin's market dominance has risen to around 61%, a trend that typically contrasts with strong altcoin performance.
- The CoinMarketCap Altcoin Season Index currently stands at 46, significantly below the 75 threshold that indicates a true altcoin season.
Bitcoin is nearing the $79,000 mark, reflecting a 24% increase over the past week, which is its most impressive performance this year. Typically, when Bitcoin rallies, altcoins, which are known for their volatility, tend to follow suit with even greater swings. However, this week, the broader market has failed to keep pace with Bitcoin's growth.
Ethereum has been the standout among altcoins, gaining approximately 30% to surpass $2,500. Nonetheless, the Total3 index, which excludes Bitcoin and Ethereum to focus on the rest of the market, has cooled down after an initial upturn, currently valued at around $753 billion—down for the week even as Bitcoin approaches $80,000.
The Total2 index, which tracks the complete altcoin market, mirrored this trend. It experienced a rise of over 24% from August 19 to 22, as the rally extended beyond Bitcoin, pushing the total market cap above $1 trillion. However, it has since retraced some gains, now hovering around $1.05 trillion while Bitcoin continues to rise.
This trend is further illustrated by Bitcoin's dominance, which measures its share of the total cryptocurrency market. Generally, if altcoins were outperforming, Bitcoin’s dominance would decrease; instead, it has increased to approximately 61% this week before slightly correcting to around 59%, close to its highest level for the year.
The CoinMarketCap Altcoin Season Index supports this observation, tracking how many of the top 100 cryptocurrencies have outperformed Bitcoin over the past 90 days. A reading above 75 indicates an altcoin season, while a score near 25 suggests a Bitcoin season. Currently, at 46, most altcoins are still trailing behind Bitcoin.
Factors Behind Bitcoin's Surge
This recent surge can be traced back to last Wednesday when the U.S. Treasury announced it would double its long-bond buybacks—from $2 billion to $4 billion per operation, starting September 9. This move weakened the dollar and prompted investors to seek Bitcoin as a hedge against inflation, similar to the trend that has propelled gold prices to record highs this year.
Adding to this momentum, former President Donald Trump met with cryptocurrency executives at the White House two days later, advocating for Congress to pass the Clarity Act, legislation aimed at clarifying which U.S. regulator oversees different crypto assets.
As Bitcoin surpassed the $70,000 mark, traders who had shorted the asset found themselves compelled to buy back at a loss to close their positions—a situation known as a short squeeze. Bitget Wallet research analyst Lacie Zhang estimated that over $4 billion in crypto shorts were liquidated within two to three days.
If Bitcoin maintains its position above $80,000, it could pave the way for a climb toward $82,000 to $87,000, with $75,000 to $76,000 serving as a potential pullback zone. The Senate is expected to revisit the Clarity Act in mid-September.
Disclaimer
The opinions expressed herein are solely for informational purposes and do not serve as financial, investment, or other advice.