A brutal drop in altcoins may be coming if the bottom of a two-year-long bullish channel holds in Bitcoin dominance.

If it breaks down, however, altcoin season may finally be here.

Bitcoin was the first-ever cryptocurrency, designed by Satoshi Nakamoto. In its likeness, all other cryptocurrencies were then created, sparking an entire category of thousands of altcoins.

Over time, more new and useful use cases developed, and tokens were designed with goals that differ greatly from Bitcoins.

The crypto market has since grown from just a new form of encrypted, digital payments to its own sector of the tech industry.

Related Reading | BTC Dominance Bear Flag Nears Breakdown, But 58% Level Remains Barrier To Altcoin Season

But the relationship between Bitcoin and altcoins remains something crypto analyst watch closely. A metric weighing Bitcoin against all other altcoins in the space is an especially helpful tool. This metric is called BTC dominance.

It can be used to predict any strong deviations between Bitcoin and altcoin performance. One of those deviations may soon be coming, and it is one where altcoins could suffer severely.

BTC.D Monthly | Source: TradingView

According to a long-term bullish channel thats now formed on BTC dominance across two years, altcoins may be in trouble.

If the bottom of the pitchfork channel holds, BTC.D would likely target one of the upper quadrants outlined by the tool.

The move up would match the last major movement in BTC.D, following a similar downtrend breakout at a similar angle.

The rise in Bitcoin dominance would send the metric to as high as an 88% share of the total crypto market. It would also leave altcoins dropping to the lowest levels the bear market has to offer.

The decline would nearly erase all progress in altcoin growth over the last few years. It would be almost as if the crypto bubble never formed at all.

Related Reading | Altcoins Pumping on Cryptocurrency Exchange Listing Brings Back Memories Of Bull Market

Unlike Bitcoin thats been becoming more recognized by institutions as a potential hedge against inflation, altcoins continue to get a bad reputation.

But the bad rap is mostly due to the ongoing decline in these assets. If BTC dominance breaks down from the channel, altcoins season would happen instead.

Regardless of what Bitcoin did, altcoins would overperform the number one cryptocurrency according to the metric.

Breaking down could potentially result in a fall to former support, resting at roughly 53%. 58% has long been considered a barrier to altcoin season.

If and when that level is broken, major altcoins such as Ethereum, Ripple, Litecoin, and more should finally catch up with Bitcoin.

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Brutal Drop In Altcoins Anticipated as Bitcoin Dominance Projected to Surge | NewsBTC - newsBTC

The crypto-focused venture firm Pantera Capital just released its latest outlook on Bitcoin and the overall crypto markets.

In a note to investors, CEO Dan Morehead says he expects an ongoing tidal wave of money printing to boost BTC as investors search for assets with a fixed supply.

That tsunami of money will have a large impact on many things. In our markets it seems inevitable that it will push up the price of fixed-quantity things like bitcoin. If there are trillions more paper dollars, the law of supply and demand implies much more paper money to buy the same amount of cryptocurrency.

Panteras analysis shows Bitcoin targeting $150,000 by August of next year.

As for the altcoin market, Pantera co-chief investment officer Joey Krug points out a number of coins have outperformed BTCs 34% gains this year, including a 98% rise in 0x (ZRX), a 97% surge in Augur (REP) and an 88% jump in Ethereum (ETH).

Its a trend that Pantera expects to continue in a new bull cycle.

During cryptocurrency bull markets, we expect assets outside of bitcoin (alt-coins or alts) to outperform

Historically, alts havent outperformed until mid to late in the bull cycle. For instance, from Jan 1, 2016 to Dec 31, 2016 bitcoins share of the market dropped from 91% to 87%. But by the end of 2017 it was down to 38%. Its currently sitting at 65%. The implication here is that over time we expect the performance gap between alts and bitcoin to widen over the course of the next year, with alts outperforming.

According to Krug, another boom for initial coin offerings is unlikely to happen, and coins will need to prove their utility this time around. The firms multi-currency hedge fund is currently outperforming BTC by about 20%.

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Pantera Capital: Bitcoin Set to Begin Meteoric Bull Run But Ethereum and Certain Altcoins Will Outperform BTC - The Daily Hodl

The apparent calm in the crypto market hides the importance of the current technical moment. There is hardly any imminent risk in fiduciary value quotations. When we get down to the structural scale of the market, it looks somewhat less reassuring.

The war for dominance continues in earnest, and at this point, Bitcoin is waging a major battle for the structural development of the market in the coming months.

As we can see from the Bitcoin Dominance chart, the King is gambling everything on defending the uptrend line from collapsing to the 64% level first and probably below 60% later.

If the Bitcoin dominance level definitively loses its current support level, Altcoins' season would be declared officially opened. Within that scenario, it's not clear what the role of Ethereum would be.

Ether's dominance chart is just a few points away from the primary resistance level at 10.22. Still, technical indicators show a depleted structure and suggest a downward movement as a more likely future development.

The market sentiment level continues to indicate that there is little confidence among market participants. The indicator created by the site alternative.me reaches today the level 40.

The ETH/BTC pair is currently trading at the price level of 0.0247 and have a similar situation that in the case of the dominance chart. It is moving very close to the major resistance of the current scenario at 0.0252.

Above the current price, the first resistance level is at 0.0248, then the second at 0.0252 and the third one at 0.0258.

Below the current price, the first support level is at 0.0235, then the second at 0.0225 and the third one at 0.021.

The MACD on the daily chart maintains the bearish cross but barely increases the bearish potential. The moving averages that make up the indicator could quickly flip upwards.

The DMI on the daily chart shows bears and bulls moving in a very narrow range and above the ADX line. This structure facilitates a possible violent break from the current situation.

The BTC/USD pair is currently trading at the price level of $9430 while moving a little further into the expanding triangle scenario (A).

Above the current price, the first resistance level is at $9500, then the second at $10450 and the third one at $11400.

Below the current price, the first support level is at $9100, then the second at $8750 and the third one at $9250.

The MACD on the daily chart continues to move gently lower and finds support at the zero levels of the indicator. The current support level may help to support a possible upward rebound.

The DMI on the daily chart shows the bulls taking advantage of the bullish trend. The bullish side remains at similar levels as the previous days and shows no intention of moving lower.

The ETH/USD pair is currently trading at the price level of $233.3and remains within striking distance of the higher resistance level of the current scenario.

Above the current price, the first resistance level is at $235, then the second at $245 and the third one at $265.

Below the current price, the first support level is at $220, then the second at $200 and the third one at $180.

The MACD on the daily chart continues to cross the overbought region, but with little increase in the bearish potential. The current position would allow an upward movement that would undo the bearish structure.

The DMI on the daily chart shows bears looking for support on the ADX line and where it could bounce upwards for a new downward development of the price.

The XRP/USD pair is currently trading at $0.1913 and is not reacting positively to the better than expected outlook for the bulls in the indicators. Critical support for the current scenario is at $0.187, and if Ripple were to drill down, we could see a sell-off of epic proportions.

Above the current price, the first resistance level is at $0.20, then the second at $0.212 and the third one at $0.235.

Below the current price, the first support level is at $0.19, then the second at $0.18 and the third one at $0.163.

The MACD on the daily chart is moving horizontally to the neutral line of the indicator, but just below it. The current structure is prone to move downwards, as moving averages lack the necessary inclination to be able to attack and attempt to cross into the bullish zone safely.

The DMI on the daily chart shows the bears losing trend strength while the bulls increase it. The current structure is favorable for bulls, although bears may still have a short-term upward movement where they would confirm the downward break of the ADX.

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Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Altcoin season just around the corner - FXStreet

Despite yesterdays 8% crash in the price of Bitcoin (BTC) driving many BTC bulls from the markets, altcoin longs have only seen slight declines, with Ether (ETH) longs defying the trend with a slight rally test of recent all-time highs on Bitfinex.

However, altcoin bears are quickly emerging from the woods, with shorts against many top altcoins piling up quickly amid Bitcoins recent drop.

With many altcoin bulls holding on despite the increase in shorts, numerous leading crypto assets could see a surge in liquidations regardless of what direction the markets ultimately take.

The BTC shake-out saw long positions on Bitfinex plummet by over 10%, dropping from 28,800 to roughly less than 26,000. BTC/USD short positions also saw an increase of nearly 16%.

BTC/USD longs on Bitfinex, 4hr: Tradingview

The crash also drove wholesale liquidations across crypto derivatives exchanges, with more than $71 million in margin calls on BitMEX and $66 million on Binance Futures taking place in the last 24 hours the third-largest daily liquidations of the past month according to Cryptometer.

While altcoins did not see heavy liquidations across futures platforms, a sharp spike in short positions coupled with stubborn bulls may create the perfect storm for an aggressive round of margin calls.

While many Bitcoin bulls quickly became bearish, ETH longs saw a slight increase of 2.5% currently testing recent record highs of 1.77 million on Bitfinex.

The persistent buying activity suggests that some market participants are predicting that Ether can continue to make gains over the dollar despite bearish signals in the Bitcoin markets.

ETH/USD longs on Bitfinex, 4hr: Tradingview

However, the Bitcoin crash also drove an aggressive increase in ETH/USD short positions, which spiked by more than 18% in less than 60 minutes.

ETH/USD shorts on Bitfinex, 1hr: Tradingview

Similar trends can be observed across other leading altcoin markets, with Litecoin (LTC) longs dropping just 2.5% as shorts increased by over 30%, and XRP bulls retreating by only 3.5% as shorts flew by 15% over a few hours.

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Liquidations May Loom as Altcoin Bulls Hold Despite Shorts Spiking - Cointelegraph

As Ethereum is finally set to launch its Ethereum 2.0 upgrade later this year, putting an end to a long streak of delays, the network will start moving toward a proof-of-stake model.

Consequently, the network will abandon the proof-of-work consensus algorithm, leaving Ether (ETH) miners with very few options. Since their equipment will become obsolete, they will be forced to start mining altcoins, or recertify as ETH stakers. So, what is the current state of ETH mining, and what exactly will happen to the industry as a result of the upcoming transition?

The Ethereum consensus is currently based on the PoW system, which is similar to that of Bitcoin (BTC). Therefore, the mining process is nearly identical for Ethereum, as miners use their computation resources to earn rewards for each block they manage to complete.

However, there is still a major difference between these processes. While Bitcoin mining has become almost entirely reliant on ASICs large, loud machines designed specifically for cryptocurrency mining that are mostly clustered in regions with cheap electricity Ethereums PoW hashing algorithm, called Ethash, has been designed to favor GPU units issued by global chipmakers like Nvidia and AMD. GPUs are much cheaper and more accessible than ASICs, as Thomas Heller, the global business director of cryptocurrency mining pool F2Pool, explained in a conversation with Cointelegraph:

Because ASICs are very specialized machines, when a new generation is released, its often a huge technology jump. So, their hash rate is much higher, and energy efficiency is better than the previous generation. That means that those manufacturers have spent a lot of money to research and develop it. Their machines are often quite expensive, while GPUs are a lot more affordable.

Heller added that those using GPU miners have much more flexibility in what you can mine. For instance, an Nvidia GeForce GTX 1080 Ti card a popular choice can mine more than 15 different currencies, while ASIC units normally support just one currency.

Nevertheless, the Ethereum network is not entirely immune to ASIC miners at least, in its current state. In April 2018, Bitmain released the Antminer E3, an ASIC produced specifically for mining Ethereum. Despite being a widely successful model that boasts a hash rate of 180 megahashes per second and power consumption of 800 Watt, it has received mixed reactions from the Ethereum community. A substantial part of GPU rig owners seemed to have suffered from loss of profits once ASICs were plugged in, while some were even forced to switch over to different networks.

Its in the Whitepaper that ETH shall be ASIC resistant. I hope said whitepaper stands for something was one of the top comments in a r/EtherMining thread discussing the Antminer E3 around the time it was announced. 800 usd only for 180mh a different Reddit user argued. Hardfork or die eth.

Some Ethereum users went on to suggest that Bitmains mining device can lead to greater centralization and thereby increase the chance of a 51% attack. Soon, a group of developers proposed programmatic proof-of-work, or ProgPoW an extension of the current Ethereum algorithm, Ethash, designed to make GPUs more competitive, thereby promoting decentralization.

According to a March paper co-authored by Kristy-Leigh Minehan, a co-creator of the ProgPoW, around 40% of Ethereums hash rate is generated by Bitmain ASICs. Alejandro De La Torre, the vice president of Poolin the sixth-largest pool for ETH confirmed to Cointelegraph that GPU mining is still dominant for the Ethereum network, adding:

At present, the profit of ETH mining is not high, and the management threshold and cost of GPU devices are higher than that of Asic devices. Compared with Asic devices, however, GPU devices are more flexible as in, you can switch to other coins with different algos.

ProgPoW has not been integrated into Ethereum yet, and it is unclear when it will eventually happen in March, core Ethereum developers were debating whether ProgPoW would actually benefit the network for almost two hours and failed to reach a consensus. Notably, a Bitmain representative previously told Cointelegraph that the mining hardware giant doesnt plan to extend Antminer E3s lifespan to operate after October 2020: As far as we know, mining will approximately end during October or sometime after this.

Indeed, Ethereum will move away from mining in the future. Scheduled to launch later in 2020, Ethereum 2.0 is a major network upgrade on the blockchain that is designed to shift its current PoW consensus algorithm to PoS where miners are virtual and referred to as block validators.

More specifically, they are randomly selected with the consideration of users wealth in the network, or their stake. In other words, the more coins PoS validators choose to stake, the more coins they accumulate as a reward.

According to Ethereum co-founder Vitalik Buterin, the network will become more secure and costly to attack than Bitcoins as a result of the transition, although the debate over which consensus algorithm is better has been around for years in the crypto community. However, its still unclear when the launch of Ethereum 2.0 will take place, as numerous bugs and management problems are reportedly delaying the process.

Related: Ethereum 2.0 Release Date Set for the Eleventh Hour as Issues Persist

Another supposed benefit of a PoS system is that its much more energy-efficient than PoW blockchains. According to data from Digiconomist, the cryptocurrencys annualized total footprint is 59.31 terawatts per hour, which is comparable to the power consumption of the entire country of Greece. However, Bitcoin might not be as bad for the environment as it seems thanks to a July 2019 report that estimated 74% of Bitcoin mining is done using renewable sources of energy.

What will happen to actual Ethereum miners? According to the documentation of the Casper upgrade that is part of the Ethereum 2.0 roadmap, the network will initially support a hybrid model that would involve both PoW and PoS, therefore, leaving some space for both block validators and GPU/ASIC miners. There will certainly be a transition period where both networks are running, Jack OHolleran, the CEO of the Skale Network a blockchain platform based on Ethereum told Cointelegraph, elaborating that this process will take some time:

It will certainly take time for the majority of ETH1 to transition into ETH2 potentially years not months. The good news about the slowness of this transition is that DApps and DeFi platforms will be able to move over at their leisure based on real-world evidence of viability, security and adoption. This is a net positive for the Ethereum ecosystem.

Once Ethereum runs fully on the PoS rails, miners will have two options. One is to sell the equipment and use that money to accumulate more ETH and start staking, while the other option, which is available exclusively for GPU miners, is to simply switch over to other Ethash networks and mine altcoins. Nick Foster, a representative for United States-based mining equipment dealer Kaboomracks, told Cointelegraph that most ETH miners will pick the latter option:

I would say most miners are not really into mining to get ETH or a specific coin. Yes, a certain number mine and hold, but I would argue against the notion that a large population of altcoin miners hold their coins for any amount of time.

Foster went on to describe how he switched to mining Ravencoin (RVN), an Ethash peer-to-peer blockchain asset, with his 3GB GPU unit once it became unprofitable to mine ETH: Its mining raven, and I sell to BTC instantly for stability sake and sell to USD to pay my power right after. I would say lots of people are employing a strategy like this.

As Foster summarized, he expects ETH miners to hop off the network, while new players those who didnt invest in the power infrastructure or the rigs will be staking ETH. He described the following scenario:

I cant imagine how much of a dork I would be if I found a five-year lease with $0.04 power, and I was mining ETH and I decided to sell everything and just keep paying my lease so I could stake ETH as a replacement.

Marc Fresa, the founder of mining firmware company Asic.to, agreed with that sentiment in a conversation with Cointelegraph: If youre invested into mining, you dont want staking since you have the buildout for it.

One of the major altcoins that might benefit from PoW miners leaving Ethereum is Ethereum Classic (ETC), a more conservative version of the blockchain that reportedly has no PoS-related plans. Since it also runs on the Ethash algorithm, its hash rate might experience a significant spike as a result of the potential miner migration caused by the Ethereum 2.0 launch.

Related: Ethereum 2.0 Staking, Explained

Larger mining pools for ETH are left with similar options. When asked about his companys post-PoW plans for Ethereum, Heller told Cointelegraph that F2Pool launched a sister company called stake.fish earlier in 2018, following the Ethereum PoS upgrade announcement. Because the switch has been delayed numerous times, stake.fish has started offering staking services for other PoS and delegated PoS projects like Tezos (XTZ), Cosmos (ATOM) and Cardano (ADA). As for Poolin, it may temporarily give up supporting ETH mining, as a result of the transition to PoS, De La Torre told Cointelegraph.

Other top ETH mining pools, namely Nanopool, Ethermine, Mining Pool Hub, SparkPool and SpiderPool, have not responded to Cointelegraphs requests for comment.

As for Ethereums ecosystem at large, experts reassure that the transition to PoS will be conducted in an uncomplicated fashion, and network participants casual users and decentralized applications built on top of Ethereum will hardly notice the change. Viktor Bunin, a protocol specialist at blockchain infrastructure firm and Libra Association member Bison Trails, echoed that sentiment in a conversation with Cointelegraph, adding:

The Ethereum mainnet we know today is expected to be added as a shard on ETH2 in Phase 1.5. All that will change is the consensus mechanism, so DApps and users shouldnt notice any change.

Bunin went on further stating that: Any concerns that the network will split, with some folks remaining on the PoW chain or that DApps will experience disruption, are overblown. Furthermore, OHolleran told Cointelegraph that ETH 2 is a new network that will run on a new token and a new inflation model, elaborating:

The connection is that it will all be composable and compatible with the Ethereum ecosystem and that tokens from the first network can be burned and replaced with tokens from the second network. What this means is that DApps and users will not be directly impacted until they manually switch networks. The indirect and immediate impact will be in relation to how the supply and perceived value impact the price of tokens on both networks.

As for now, it is clear that there shouldnt be a shortage of Ethereum block validators. According to a recent report by cryptocurrency analytics firm Arcane Research, the number of Ethereum wallet addresses that include or exceed 32 ETH the minimum amount required for staking is approaching 120,000.

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ETH Miners Will Have Little Choice Once Ethereum 2.0 Launches With PoS - Cointelegraph