Although 2024 was a good year for crypto overall, Bitcoin (BTC 3.79%) dominated the spotlight, leaving many altcoins in the dust. Bitcoin’s impressive performance has overshadowed the rest of the crypto market, and many are probably wondering when will it be time to forget about Bitcoin and turn to altcoins (basically, any crypto other than Bitcoin).

The answer is complex, but if history is to be believed, the tides may soon be changing.

Bitcoin dominance in 2024

Altcoins – those smaller, more speculative cryptocurrencies that sometimes skyrocket in a short period of time – had a relatively quiet 2024. Despite multiple predictions of an altcoin resurgence, the rally has not yet arrived. This is mainly due to Bitcoin’s dominance – its share in the crypto market value – which has increased over the past two years and continues to climb.

Today, the market capitalization of Bitcoin represents almost 60% of the total crypto market capitalization and has been steadily increasing since 2023. Although the resurgence of Bitcoin is causing new momentum in the field of cryptography, it has hardly benefited altcoins.

This rise in power is a telling sign of the current state of the market. Historically, when Bitcoin dominance increases, altcoins struggle to gain momentum. As long as Bitcoin remains the priority, the likelihood of altcoins generating significant returns remains low.

The Key to an Altcoin Rally: Falling Bitcoin Dominance and Interest Rate Cuts

What needs to happen for altcoins to shine? First, we need to see Bitcoin’s dominance fall, a phenomenon that tends to precede an altcoin rally. The big question is: when will Bitcoin’s dominance start to decline?

To get an idea, we can look back at previous market cycles. One of the most compelling scenarios is 2019. This year has key similarities with 2024, particularly regarding interest rate policy.

In both cases, the Federal Reserve launched a cycle of rate cuts after a prolonged period of rate hikes. While it may seem unrelated, there is a strong correlation between rate cuts and increased liquidity, which often leads to riskier behavior from investors – and risk-taking is exactly what drives the growth of altcoins.

When the Fed began cutting rates in 2019, Bitcoin’s dominance initially continued to climb, peaking at around 70%. But at the end of 2019, the trend began to reverse. Altcoins began to gain momentum as liquidity flowed more freely into riskier assets. In just one year, the total altcoin market capitalization grew from $60 billion in December 2019 to an astonishing $726 billion at the end of 2020. Two years later, it soared to over 1 trillion dollars.

Are we on the cusp of a new altcoin boom?

Could we be at the dawn of a new altcoin resurgence? It’s certainly possible.

The Fed’s latest rate cuts, in September 2024, could pave the way for a similar market environment. Just like in 2019, it may be several months before Bitcoin’s dominance begins to wane, but the foundations for an altcoin rally appear to be forming.

If we follow the 2019 roadmap, altcoins could start to gain momentum towards the end of the year, and if liquidity continues to increase as rate cuts take effect, we could finally see altcoins catch up with Bitcoin in 2025.

That said, it’s important to manage expectations. Bitcoin could very well continue to outperform altcoins for some time to come. However, it’s probably safe to say that there are clear signs that the conditions for an altcoin rally are starting to take shape.

This is in no way an incentive to try to time the market. Rather, it is a reminder to remain patient and consider the available data.

In short, it is worth keeping a close eye on the altcoin market. If history is any guide, we could be on the brink of another explosive altcoin cycle. Even as Bitcoin continues to shine, don’t sleep on the potential for altcoins to generate extraordinary returns in the near future. See you in 2025.