Impending Altcoin Season: Data Shows It’s Closer Than Ever
beincrypto.com 09 July 2024 17:33, UTC Over the last few months, altcoin prices have dropped 30% to 70%, leading analysts to write off the possibility of an altcoin season. But when equipped with new information, BeInCrypto finds that things may be about to change.
This analysis sheds light on the rationale behind the thought while offering insights into the potential catalysts.
Early Days But the Signs Have Appeared
Altcoin season is in a market phase where non-Bitcoin (BTC) cryptocurrencies register a consistent surge in value while outperforming the number one coin.
One of the indicators validating this period is TOTAL2, which is the crypto total market cap, excluding BTC. When this market cap increases, it gives credence to the potential increase in the prices of altcoins.
However, a decrease implies that Bitcoin is dominating the market. At press time, the total altcoin market cap stands at $940.37 billion — a 4.87% increase in the last 24 hours. The same market cap had initially dropped by 23.26% between June 6 and July 8.
Read More: Which Are the Best Altcoins to Invest in July 2024
If the indicator’s value continues to increase, the altcoin season will be closer. The last time such occurred was between February and March. At that time, the value of TOTAL2 went from $753.83 billion to $1.24 trillion within a month.
Following the recent change, analysts on X seem to be changing their stance, favoring the dominance of altcoins. One of them is Michaël van de Poppe, founder of MN Trading.
“The Altcoin market capitalization has reached a crucial higher timeframe support level and finds support here. It’s still early in the week, but if this week continues this upward trend, then the signs will start to improve.” van de Poppe opined on X.
Bitcoin Dominance Steps Back, May Open Doors for Altcoins
Apart from opinions, another factor that determines if altcoins’ time to shine is here is Bitcoin’s dominance. For the cycle to be validated, the BTC.D has to decrease.
Employing the weekly chart, we observe that the BTC.D fell from 62.69% in March 2021 to 40.89% in May of the same year. History shows that this was around the same period many altcoins hit their all-time highs in the last bull market.
This week, the dominance has fallen from 55.04% to 54.68%, indicating that some altcoins have begun to outperform BTC.
For this to mirror the performance shown in 2021, at least 75% of the top 50 altcoins have to perform better than Bitcoin.
According to data from Blockchaincenter, only a few cryptocurrencies, including meme coins, have done that. Some of them include Toncoin (TON), Pepe (PEPE), Kaspa (KAS) and Bonk (BONK).
As a result, the Altcoin Season Index over the last 90 days remains at 29. However, this is an improvement from the reading a few days ago when it was 25.
Should the index continue to hit higher values, altcoins will get closer to retesting their all-time highs, putting BTC on the back foot in the process.
Read More: What Are Altcoins? A Guide to Alternative Cryptocurrencies
Ethereum, Solana’s Role Crucial
Additionally, it is important to mention that Ethereum (ETH) has always acted as a catalyst for fostering altcoin dominance.
Within the last few months, ETH has underperformed compared to BTC. However, the impending approval of the spot Ethereum ETFs may spur a notable increase in ETH’s value.
If this is the case, other altcoins may join the potential rally. In Capo of Crypto’s case, the update on the ETH ETFs, as well as the official applications for Solana ETFs by VanEck and 21Shares, is why the analyst is bullish on altcoins.
“Selling pressure from the German Government is being absorbed. All spot Ethereum ETF applicants have filed updated S-1s.VanEck & 21Shares have officially filed 19b-4s for spot Solana ETFs. I’m bullish for the next few weeks, especially on altcoins.” Capo of Crypto wrote.
Based on the analysis above and market sentiment, altcoins look like they are set for a big pump. However, traders need to keep an eye out.
If selling pressure hits the market again, the hike could be invalidated. Also, if Ethereum does not receive impressive inflows into the ETFs, the cryptocurrencies may struggle to jump.
