The cryptocurrency market has been bolstered by a significant surge in altcoin trading, pushing its market dominance to an all-time high of 50%. While this is exciting news for the entire crypto community, some experts are warning that it could lead to a crash.
Here Comes the Crash?
JA Maartoon, a community manager and crypto analyst at CryptoQuant, has raised the alarm over the altcoin market’s dominance exceeding 50%. Here is the chart that supports his claim:
Maartoon also noted that when altcoin trading dominance surpasses 50 percent, a substantial drop in BTC prices often follows. This is true for other markets as well.
The chart below shows that the value dip in November 2022 was preceded by a rise in altcoin dominance, with altcoins accounting for 55% of total trading volume. At this time, market sentiment was already low, and investors were wary of risky investments despite the indications that crypto trading would be possible in 2023.
Conclusion
US Consumer Price Index (CPI) data will be released on January 12, and some experts suggest it will result in increasing inflation. In the event that the Federal Reserve decides to raise interest rates, this could lead to a further decrease in cryptocurrency market capitalization.
If future increases in interest rates are combined with the current negative market sentiment, it could result in another crash for not just altcoin trading, but for the entire crypto market.
