In the cryptocurrency market, a phenomenon known as “altcoin season” has started to capture the attention of users and experts. This term refers to a period when alternative cryptocurrencies (altcoins) outperform the leading digital currency, Bitcoin. Recent market data suggests that such a season might be on the horizon, with notable shifts in Bitcoin dominance and promising indicators across various metrics.
Bitcoin’s Dominance Retreat
For months, Bitcoin seemed content at the $35,000 level, consolidating its position. However, the recent scenario paints a different picture. Altcoins have taken centre stage, showcasing notable price performances and causing a dip in Bitcoin dominance by almost 1.5% in just a week. This marks the most significant drop since August, signalling a potential shift in market dynamics.
Indicators Pointing Towards Altcoin Season
Several indicators are pointing toward the emergence of an altcoin season. Analysts report a substantial increase in altcoin sector market valuations since the last cycle peak. The total value locked across all chains has reached a three-month high, and even “Bitcoin Ordinals”, typically associated with meme coins and NFTs, have experienced a boost. These signs collectively suggest a growing momentum in the altcoin market.
Defining Altcoin Season
While there is no official declaration for the commencement of an altcoin season, a popular approach suggests that 75% of the top 50 altcoins, excluding stablecoins and asset-backed tokens, should outperform Bitcoin for 90 consecutive days. If this condition is met, it is argued that altcoin season is in full swing.
The crypto market recently transitioned out of the “Bitcoin season” zone. Historically, even under the best circumstances for altcoins, reaching the “Altcoin season” area has taken several months. However, major catalysts are required to favour altcoins. With the anticipation of a potential spot Bitcoin ETF approval in the coming months, the attention might remain on Bitcoin in the short term.
Bitcoin’s Response and Potential Implications
In response to the recent surge in altcызoin performance, Bitcoin set a new 2023 high, surpassing $37,000. This move coincided with rumours about negotiations between the SEC and Grayscale to transform GBTC trust into a spot Bitcoin ETF. The market is now closely observing Bitcoin’s trajectory, considering the possibility of a further ascent to $40,000.
However, a potential bearish divergence can appear, hinting at fading bullish momentum and the likelihood of a price correction. The ascending channel could be crucial in determining the future direction of Bitcoin’s price.
As the cryptocurrency market witnesses shifts in dynamics, the possibility of an altcoin season looms. While indicators point towards a favourable environment for altcoins, the market’s focus on Bitcoin and potential regulatory developments could influence the short-term narrative.
