Bitcoin Trader Warns of Correction as BTC Dominance Reaches 2021 Levels; Solana Leads Market Gains

• While bitcoin and other major cryptocurrencies showed minimal movement, Solana's SOL token surged by 5% to $173, leading the market gains with a 14% increase over the week.
• Bitcoin's market dominance reached over 57%, the highest since April 2021, indicating a market preference for Bitcoin's stability over altcoins. Although one trader holds a bearish view.
• The Solana network experienced increased activity with AI-themed memecoins driving trading narratives, leading to record-high token issuances and revenue through platforms like Pump.

Solana’s SOL and ecosystem memecoins, such as popcat (POPCAT), led crypto market gains on Thursday, with bitcoin {{BTC}} and majors mostly flat. A bitcoin trader believes the rising dominance rate for suggests short-term bearishness.

BTC added under 1% in the past 24 hours, with majors ether {{ETH}}, BNB Chain {{BNB}}, xrp {{XRP}} and dogecoin {{DOGE}} showing mixed price action. The broad-based CoinDesk 20 (CD20), a liquid index tracking the largest tokens by market capitalization, rose 0.43%.

Last week, a widely tracked bitcoin dominance indicator reached over 57% on CoinMarketCap, to its highest level since April 2021. Dominance refers to the ratio between the market capitalization of BTC to the total market capitalization of all cryptocurrencies combined and is often used as a gauge for market sentiment.

High dominance might indicate that bitcoin is leading the market, which can be seen when investors prefer the relative stability and established nature of bitcoin over the higher risk associated with altcoins.

Conversely, a decrease in bitcoin's dominance might suggest that investors are moving their capital into altcoins, potentially signaling the start of an “altcoin season.”

“Ethereum continues to lose market share to bitcoin and other altcoins. As a result, BTC’s share of all cryptocurrency capitalization has risen to 57.3%, the highest since April 2021,” Alex Kuptsikevich, senior market analyst at FxPro told CoinDesk in an email. “But that doesn’t necessarily mean an upward trend for the top cryptocurrency, which has pulled back below $67K, losing 1% in the last day and nearly 4% from its peak on 21 October.

“The price is now close to a local support level at $66.8K. A break of this support will open the way for a deeper correction to $65.5K, near the 61.8% retracement level from the last rally and the late September top,” Kuptsikevich warned.

SOL leads market

SOL jumped 5% to $173 in the past 24 hours, extending weekly gains to 14% as it reached price levels last seen in early August. SOL set a record high against ether, as reported, while, network-based memecoins POPCAT, BONK and GOAT rose as much as 70% amid a bump in network volumes and trading activity.

The Solana ecosystem is a flourishing hotbed for trading activity for its engaged community and prevalence of small-cap trading - where frenzied memecoins trend often last a few weeks that boosts SOL prices.

Artificial intelligence-themed memecoins are the current flavor of the week, where projects claiming to have AI tools are driving trading narratives on the network. That pushed revenues and token issuances on the Solana token deployer Pump to record highs earlier this week.

Active addresses grew to 85,000, of which 37,000 were new wallets, indicative of strong demand. A Pump-connected fee account sold over $6 million worth of SOL late Monday, taking its lifetime sales to over $78 million or 500,000 SOL.

Over 40,000 new tokens were created on Solana in the past 24 hours, SolanaFloor data shows.

🚨NEW: Over 40,000 new tokens created on @Solana in the last 24 hours, driven by the surging popularity of memecoin. pic.twitter.com/d8EVCsn46E

— SolanaFloor (@SolanaFloor) October 23, 2024