Markets
Altcoins over Bitcoin? Analyzing the Potential of an Altcoin Season
In recent months, altcoin prices have dropped by 30% to 70%, leading analysts to dismiss the possibility of an altcoin season. But when armed with new information, BeInCrypto finds that things may be about to change.
This analysis clarifies the logic behind the thinking and offers insights into potential catalysts.
Early days, but signs have already appeared
Altcoin season is a market phase where non-Bitcoin (BTC) cryptocurrencies are seeing a consistent increase in value, outperforming the number one coin.
One of the indicators that validates this period is TOTAL2, which is the total crypto market cap excluding BTC. When this market cap increases, it lends credibility to the potential rise in altcoin prices.
However, a decrease implies that Bitcoin is dominating the market. At the time of publication, the total altcoin market cap stood at $940.37 billion — an increase of 4.87% in the last 24 hours. The same market cap initially fell by 23.26% between June 6 and July 8.
Read more: What are the best altcoins to invest in in July 2024
Crypto Market Cap Excluding BTC Daily Chart. Source: Trading view
If the indicator continues to rise, the altcoin season will be closer. The last time this happened was between February and March. At that time, the value of TOTAL2 went from $753.83 billion to $1.24 trillion in one month.
Following the recent shift, analysts at X seem to be changing their stance, favoring the dominance of altcoins. One of them is Michaël van de Poppe, founder of MN Trading.
“Altcoin market cap has reached a crucial higher term support level and is finding support here. It is still early in the week, but if this week continues with this upward trend then the signs will start to improve.” van de Poppe gave an opinion on X.
Bitcoin Dominance Recedes, Could Open Doors for Altcoins
Besides opinions, another factor that determines whether it is time for altcoins to shine is Bitcoin dominance. For the cycle to be validated, BTC.D has to decline.
Using the weekly chart, we see that BTC.D fell from 62.69% in March 2021 to 40.89% in May 2021. History shows that this was the same period when many altcoins reached their all-time highs in the last bull market.
This week, dominance dropped from 55.04% to 54.68%, indicating that some altcoins have started to outperform BTC.
For that mirror the performance shown in 2021, at least 75% of the top 50 altcoins need to outperform Bitcoin.
According to data from Blockchaincenter, only some cryptocurrencies including meme coinshave done so. Some of them include Toncoin (TON), Pepe (PEPE), Kaspa (KAS), and Bonk (BONK).
As a result, the Altcoin Season Index for the past 90 days remains at 29. However, this is an improvement from the reading a few days ago, when it was 25.
If the index continues to reach higher values, altcoins will come closer to retesting their all-time highs, putting BTC at a disadvantage in the process.
Read more: What are Altcoins? A Guide to Alternative Cryptocurrencies
Ethereum, the crucial role of Solana
Additionally, it is important to mention that Ethereum (ETH) has always acted as a catalyst to fuel altcoin dominance.
In recent months, ETH has underperformed BTC. However, the Ethereum ETFs imminent approval in sight could stimulate a notable increase in the value of ETH.
If this is the case, other altcoins could join the potential rally. In the case of Capo of Crypto, the update of ETH ETFs, as well as official filings for Solana VanEck and 21Shares ETFs are the reason why the analyst is bullish on altcoins.
“The German government’s selling pressure is being absorbed. All Ethereum spot ETF applicants have filed updated S-1s. VanEck and 21Shares have officially filed 19b-4s for Solana spot ETFs. I’m bullish for the coming weeks, especially on altcoins.” Capo of Crypto he wrote.
Based on the above analysis and market sentiment, altcoins appear poised for a major rally. However, traders need to keep an eye on the situation.
If selling pressure hits the market again, the rally could be invalidated. Furthermore, if Ethereum doesn’t receive impressive inflows into ETFs, cryptocurrencies may struggle to bounce.
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate and unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult a professional before making any financial decisions. Please note that our Terms and conditions, Privacy PolicyIt is Disclaimers have been updated.