Bitcoin (BTC)’s share of the crypto market (also known as its dominance) plummeted Thursday after the Securities and Exchange Commission (SEC)’s plan to regulate digital currencies was complicated by a U.S. Court. This sparked hopes for an outperformance from alternative cryptocurrencies.

The District Court for the Southern District of New York, in a much-anticipated ruling, ruled that XRP was not a securities when it was offered directly to institutions, but one when it was sold to individuals via centralized exchanges.

The ruling effectively put a spanner into SEC’s plans to categorize all altcoins as securities and subject them to strict oversight.

According to TradingView’s charting platform, Bitcoin’s dominance fell by 2.6%, to 50.14 %, after the court decision. This is the largest one-day drop since June 13, 2022. Altcoins such as XRP and MATIC, which have double-digit gains, far outshine bitcoin.

Some observers predict that altcoins will continue to outperform in the short term.

In a Thursday market update, Decentral Park Capital stated that “Alt Season may be here following the Ripple announcement as indicators suggest collectively risk appetite is moving down the risk continuum.” Investors are in for a game-changing ride with the U.S. Dollar breaking down and inflation nearing its end.

Noelle Acheson of the Crypto Is Macro Now Newsletter, on the other hand, cautioned that the ruling may help Coinbase with its legal battle against the SEC but warned against predicting a massive altcoin rally.

The SEC charged the cryptocurrency exchange Coinbase, and its offshore competitor Binance with offering unregistered security, which created uncertainty in the market.

Acheson, a CoinDesk reporter, said that “the ruling should be sufficient to reawaken interest in the changing market narrative which could itself be enough for new flows.”

“However it is premature to assume a ‘win.’ The SEC will appeal the decision and, given some inconsistencies in the ruling, it could win. The uncertainty is likely to continue for a while. “It feels like it’s too early for alt-season; we will probably wait until there is more clarity in the Coinbase case,” Acheson stated.

Analysts at K33 Research expressed a similar view in a client note on Friday. They said, “The ruling will be appealed, and it might even be reversed. So we expect that the ongoing battle will continue.”

The court found that Ripple had violated the securities laws when it sold XRP to institutions directly. Institutions that purchased XRP could be subject to regulatory scrutiny, causing further market uncertainty.

It is important to remember that as underwriters, institutional investors who bought directly from Ripple could be subject to a class-action lawsuit. Townsend Lansing is the head of product at CoinShares. He said that this area should be closely monitored, particularly if there were big-name venture investors involved. The legal landscape is constantly changing, and we encourage all parties to keep up to date with these developments.

Sheldon Reback is the editor.