Evidence suggests that altcoin season is coming even as Bitcoin’s hegemony endures

Written by Rock Buivy

Post Date: 23 Feb, 24

Although 52% of transactions are still made using Bitcoin, on-chain and technical data indicate that the altcoin era is rapidly arriving.

On February 20, Bitcoin saw a severe correction, falling as much as 4% from an intraday high of $53,019 to a low of $50,812, potentially wiping out the previous seven days’ gains.

The question of whether the altcoin season (altseason) has arrived was raised by traders’ assessment of the state of the crypto market as a whole following this decline.

Why is the price of Bitcoin declining?

The current price collapse, according to traders and market analysts, is one of the five stages of the Bitcoin halving cycle, and it appears that BTC is retracing prior to the halving before starting the much anticipated parabolic ascent that follows.

In a post on February 15 on X, cryptocurrency trader and analyst Rekt Capital provided the following graphic and stated that Bitcoin has “one last Pre-Halving Retrace left” before continuing its upward trajectory.

Because of the high funding rates for Bitcoin, independent market analyst Sjuul cautioned traders to “expect some correction across the board.”

Significant movements in “mid-tier traders often work as excellent signals for” profit-taking and “dip buys,” according to market research firm Santiment.

“Stablecoin holders with $10K to $100K: Added $44.3M in USDT over the last two weeks.”

This suggests that, should there be a downturn, they may be preparing to purchase the drop.

Altcoins in contrast to Bitcoin

Altcoins have displayed great performance over the last 12 months, posting double- and triple-digit gains, with some outperforming Bitcoin. Some of them have demonstrated better performance in shorter timeframes.

Over the past 12 months, CoinMarketCap data shows that Bitcoin has increased by 107%, Solana’s SOL has increased by 308%, Avalanche’s AVAX has increased by 80%, and Chainlink’s LINK has increased by 136%.

While “BTC and ETH are leading the pack, with year-to-date gains of 17.6% and 18.2%, respectively,” according to the most recent statistics from on-chain analytics company Glassnode, Bitcoin’s year-to-date (YTD) performance exceeds the total market capitalization of all altcoins.

“The aggregate Altcoin market cap has not experienced the same performance, with YTD growth being less than half of the two majors,” stated Alice Kohn, an analyst at Glassnode.

Although Ether started to outperform BTC once the spot Bitcoin ETFs were approved in January, Glassnode observes that on February 8, Ether’s performance lagged behind Bitcoin’s.

Realised Cap, a statistic that “aggregates the cost basis value of all coins transferred on-chain,” can also be used to monitor the success of digital assets, according to Glassnode.

According to Glassnode, Bitcoin is still displaying its supremacy, with an estimated “$20B in capital inflows per month at present.”

The graph below shows how, since October 2023, Bitcoin’s relative market capitalization has increased by 1,000%, further demonstrating the currency’s growing domination.

The research states, “It is evident that capital moves down the risk curve into Altcoins at a slower pace compared to the rotation between the two major cryptocurrencies, a trend which appears to be in play once again.” With more than 52% of the market capitalization of all digital assets, Bitcoin is still in the lead.

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How near is the alternate season?

According to independent expert Stockmoney Lizards, “many Altcoins are about to skyrocket in the next Altseason,” he told his followers on the social media site X on February 18.

The analyst released a graphic that demonstrated how the market capitalization of altcoins had risen over a key support level and was now experiencing a bull run comparable to the 10x gains seen in 2021.

We are close.

It might still be too early to declare the cryptocurrency season, despite some indications being present. Since October of last year, Glassnode’s altseason indicator has been showing strong momentum.

On February 4, the indicator resumed its bullish trend after pausing during the sell-the-news event that was sparked by the introduction of Bitcoin ETFs in January.

It’s interesting to note that the indicator has stayed positive since then, indicating that investors are currently confident in cryptocurrencies and that the market is currently in a risk-on attitude.

Only 59% of the top 50 cryptocurrencies have outperformed BTC during the last 90 days, according to data from Blockchain Centre.

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Even though there has been an increase in this indicator over the past few days, an altcoin season cannot yet be declared. This % needs to rise above 75% in order to announce an altseason.

“Our Altcoin Indicator indicates a more mature and potentially sustained uptick in Altcoin markets, but it is currently relatively concentrated in higher market cap assets,” Glassnode says in closing.

This indicates that there may be an altcoin season coming, but it may be too soon to declare.

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