“Traders are positioning themselves for an outsized altcoin rally” – Coinbase

• Coinbase analysts and one crypto VC expect altcoin rally after inauguration
• Analysts cited weakening BTC dominance and capital inflows into altcoins

Analysts believe the crypto market could be positioning itself for a massive altcoin rally following Donald Trump’s inauguration on Monday. In fact, Coinbase analysts noted that the slight decline Bitcoin (BTC) dominance earlier this week led to the latest altcoin pump.

Additionally, analysts added that traders are positioning themselves for further altcoin momentum under the new administration. Part of their weekly market commentary read,

“Meanwhile, the decline in BTC dominance from 58.5% to its 57.3% support level during the inflation relief rally on January 15 suggests to us that traders could be positioning themselves for a rally outsized altcoin market thanks to positive catalysts for risk assets. and crypto.

Bitcoin dominance recedes

Chris Burniske, partner at crypto-VC firm Placeholder and former head of crypto at ARK Invest, echoed a similar sentiment, citing BTC’s dominance. He said,

“Importantly for the long tail, $BTC dominance has been slowly fading since late November 24 – fireworks if this continues.”

According to Coinbase analysts David Duong and David Han, stablecoin inflows are another bullish signal for a likely altcoin pump.

They noted strong capital inflows into the space and much of this went to altcoins as BTC and ETH saw outflows.

“The supply of stablecoins – perhaps in our view the clearest indicator of capital flows into these long-tail assets – increased by $1.3 billion last week, a continuation of trends we observed over the past two months. This contrasts with net outflows from the US BTC and ETH spot ETFs of $457 million and $206 million respectively.

Despite the bullish outlook, however, another indicator – ETH/BTC – was not aligning with the others, at least at the time of writing. Here, this ratio tracks the relative performance of ETH versus BTC, with the same rally occurring during the strong November altcoin season.

In fact, the ratio also hit a new all-time high of 0.31 at press time. As part of the altcoin sector barometer, this does not bode well for the expected altcoin rallyespecially if the November trend repeats itself.

That being said, altcoins like Fartcoin and XRP have been the weekly winners, with almost 100% and 30% gains, respectively. Solana (SOL) also saw gains of 30%, while Hedera saw gains of 22%.

Here, it is also worth noting that Hedera and XRP were also among the top performers during the November altcoin run. Whether they can maintain that momentum this time around remains to be seen.