Key Points
- Bitcoin’s upward trend and capital influx are pivotal for a healthy altcoin season.
- The combined dominance of Bitcoin, Ethereum, USDT, and USDC is nearing its top, indicating a potential altcoin season.
Bitcoin [BTC] has been on an upward trajectory in September and October, after a steady decline since March. On October 29th, it almost retested its all-time high, reaching $73.6k before experiencing a setback.
The analysis of on-chain metrics showed an increase in large transaction volumes and a bullish sentiment in lower timeframes. On higher timeframes, the influx of capital and rotation will play a crucial role for Bitcoin and altcoin markets in this cycle.
Is an Altcoin Season Approaching?
Benjamin Cowen, CEO and Founder of Into The Cryptoverse, predicts an altcoin season next year. He observed that the combined dominance of Bitcoin, Ethereum [ETH], USDT, and USDC hit 82% in 2020 and 2023, forming tops before the altcoin market rallied. Currently, it stands at 80.51%, nearing its top. A rejection and sustained downtrend would suggest that Bitcoin and Ethereum are being outpaced by the rest of the altcoin market.
A decrease in stablecoin market share would imply investors are buying crypto. Cowen anticipates this to commence in 2025, which means altcoin holders need to be patient before witnessing substantial gains. The altcoin season index concurs, as its reading of 27 indicates that the altcoin market has been unable to keep up with BTC’s moves. Another point to note is that altcoins are more affected by a sell-off than BTC, experiencing greater draw-downs.
Positive Indications for Investors
The Bitcoin dominance chart has moved beyond a key resistance from the previous cycle. At 60.5%, BTC.D is set to surge towards 72%, the top of the previous cycle. However, it’s not necessary for BTC.D to reach 72% before the altcoin season can begin. A break in the bullish structure of the BTC.D would be an early sign that the altcoin season is on the horizon. This is another factor that traders and investors should monitor. The higher the BTC.D rises before a reversal, the better the potential altcoin gains could be.
Bitcoin acts as a magnet, attracting the majority of money to the crypto ecosystem. The rotation from BTC to other altcoins contributes to an altcoin season. As it stands, it is still an opportune time to accumulate more alts for which a market participant has conviction.
