Altcoins
Altcoin party on hold? The index suggests a stagnant market
The cryptocurrency market has witnessed notable price movements since the beginning of the year Bitcoin (BTC) leading the charge. Despite Bitcoin’s impressive run, the long-awaited altcoin season has yet to materialize.
Altcoin enthusiasts are wondering whether the current trends in Ethereum (ETH) and other altcoins are enough to trigger this market shift.
Bitcoin market dominance
Bitcoin continues to maintain a dominant presence in the cryptocurrency market. Second CoinMarketCapBitcoin’s dominance remains above 50%, meaning that more than half of the market capitalization is tied to BTC.
This high level of dominance is a significant factor preventing the onset of an altcoin season, as it limits the market share available to other cryptocurrencies.
The Seasonal Altcoin Index: A Measure of Market Changes
A key metric to evaluate the start of the altcoin season is the Seasonal Altcoin Index from blockchaincenter.net. Currently, this index stands at 35. To declare an official altcoin season, the index must reach 75.
This threshold is reached when 75% of the top 50 altcoins surpass Bitcoin. While some individual altcoins have shown strong performance, broader market trends indicate that we are not yet in altcoin season.
Ethereum, the second largest cryptocurrency by market capitalization, has shown significant upward movements. Currently trading at around $3,889, Ethereum has maintained a strong uptrend, as indicated by its Relative Strength Index (RSI).
Historically, Ethereum rallies have often signaled the start of altcoin season. However, for this trend to be confirmed, broader market parameters need to align.
While Bitcoin and Ethereum dominate the headlines, other altcoins are making waves with notable gains. Pepper (PEPE) is up more than 1,000% over the past three months, outperforming Bitcoin by a substantial margin.
Likewise, Dogwifhat (WIF) is up nearly 900% over the same period, demonstrating strong bullish tendencies. These lesser-known altcoins are attracting significant investor interest, contributing to localized changes in market capitalization.
Total crypto market cap at $2.5 trillion on the daily chart: TradingView.com
Market capitalization and investor behavior
The total market capitalization of cryptocurrencies is approximately $2.55 trillion. Within this, altcoins hold less than 50%, with Ethereum alone accounting for 18%.
Investors often seek higher short-term gains by shifting their investments from Bitcoin to altcoins, especially when the price of Bitcoin stabilizes. This behavior can increase altcoin prices and redistribute market capitalization towards these smaller cryptocurrencies.
Despite the strong performance of individual altcoins, several factors are holding back the broader altcoin season. Bitcoin’s high price can pose a barrier to new traders, who may prefer to invest in lower-priced altcoins.
Furthermore, for a full-fledged altcoin season to begin, a more significant redistribution of market capitalization from Bitcoin to altcoins is needed. This shift is not solely dependent on the performance of a few altcoins, but requires more widespread and consistent outperformance of Bitcoin among the top 50 cryptocurrencies.
Featured image of Pintu, TradingView chart