Altcoin
Signs of an altcoin season: Why haven’t we entered a season yet?
- Altcoins performed well in a six-month window, but it does not signal an altcoin season.
- Bitcoin dominance chart could see accelerated gains for altcoin market capitalization.
Bitcoin [BTC] he couldn’t shake off the sadness of the halving even though almost a month had passed since the event. Market participants are eagerly awaiting a bull run, both for BTC and altcoins.
The altcoin season began in September 2023 and has seen a pullback over the past six weeks.
There’s a lot more in store for altcoins, but they’ve already seen a decent comeback in that six-month window. How crazy could altcoin season get once Bitcoin is on track to hit this cycle’s high?
Replicate the performance of the past cycle
Source: TOTAL3 on TradingView
During the 2020 cycle, the altcoin market capitalization rose from $51.2 billion in May 2020 to $1.13 trillion in November 2021.
That was a 21.6x gain, and a similar outcome during this cycle could push the market cap to $6 trillion.
This seems like an eye-popping number compared to $640 billion at the time of this writing, but crypto cycles have a way of destroying expectations.
While altcoins have performed well in recent months, they have been competing with Bitcoin for a share of capital inflows.
This could change once investors are willing to accept more risk, confident in extended cryptocurrency gains, and look to expand their altcoin holdings.
Bitcoin dominance could be the key
Source: BTC.D on TradingView
Altcoin winds could become dramatically more bullish once Bitcoin’s dominance begins to wane. This chart maps the percentage of total cryptocurrency market capitalization captured by Bitcoin.
Once a serious downtrend began, this would indicate that participants were more eager to purchase altcoins than Bitcoin.
Over the past 13 months, Bitcoin’s dominance has slowly increased. This is typical of bear markets and persists until the late bull phase.
The few months in which this parameter is in free fall are when the altcoin season truly begins.
Light That of Ethereum [ETH] Price forecast 2024-2025
Comparing the altcoin market capitalization chart with the BTC.D chart, we can see that the biggest altcoin gains were achieved when Bitcoin dominance was in a downtrend.
Therefore, market participants awaiting an altcoin season this cycle may be on the lookout for a decline in Bitcoin’s dominance.