Bitcoin’s recent surge has paused as traders engaged in profit-taking. This triggered a pullback, which dragged the cryptocurrency near $116,000. It has since staged a recovery of nearly 2%, pushing Bitcoin above $119,000 at the time of writing.
New data has emerged, signaling that BTC is not at a local top but in a transition phase, with timing, behavior, and structure all pointing to further upside.
BTC Makes Room for Alts
According to the analytics firm SwissBlock’s latest market report, ‘Altcoin Vector,’ beneath the surface, capital rotation has started, and Ethereum is emerging as the next leg of the cycle. The firm noted that Bitcoin is consolidating, not breaking down.
BTC dominance has likely peaked in the short term as capital rotation accelerates across the crypto market. The ETH/BTC ratio is also rising steadily, indicative of Ethereum’s relative strength and its ability to attract liquidity from Bitcoin while simultaneously lifting the broader altcoin complex.
This is also driving renewed momentum in other altcoins as liquidity moves within the market rather than exiting it. This trend indicates an expansion phase where capital is redeploying into Ethereum and select altcoins, while simultaneously reducing BTC’s market share. Such rotation suggests that confidence remains intact as investors seek higher returns beyond BTC.
BTC Hasn’t Topped Yet
While Bitcoin’s pause has triggered rotation into Ethereum and altcoins, SwissBlock argues that the broader cycle for the world’s largest cryptocurrency itself remains unfinished. According to BTC Vector’s Optimal Signal, each major expansion in this cycle has lasted 15-30 days, while the current rally is only on day 12. The rotation of capital into Ethereum indicates that the cycle remains incomplete.
Moreover, Glassnode’s Short-Term Holder Relative Unrealized Profit remains well below the levels seen during previous cycle tops in January and April 2024. This implies that market participants are not exhibiting excessive profit-taking or euphoria yet. Additionally, both Willy Woo’s Speculation Index and VWAP Liquidity confirm that the market is not overheated, as neither indicator has reached prior cycle extremes. Together, these factors suggest ongoing structural support for Bitcoin to move higher.
This evolving situation highlights the intricate dynamics of the cryptocurrency market. Investors should remain vigilant and informed about not only Bitcoin’s performance but also the potential resurgence of altcoins, as shifting capital flows may offer new opportunities.
