Altcoins
Altcoins vs. Bitcoin? Analyzing the Potential of an Altcoin Season
Over the past few months, altcoin prices have dropped by 30-70%, leading analysts to dismiss the possibility of an altcoin season. But thanks to new information, BeInCrypto notes that things could be about to change.
This analysis sheds light on the logic behind this thinking while offering insight into potential catalysts.
It’s still early, but the signs are showing
Altcoin season is a market phase where non-Bitcoin (BTC) cryptocurrencies are seeing a steady increase in value while outperforming the number one coin.
One of the indicators validating this period is TOTAL2, which is the total market capitalization of cryptocurrencies, excluding BTC. When this market capitalization increases, it gives credence to the potential increase in altcoin prices.
However, a decrease implies that Bitcoin Dominates the MarketAt press time, the total altcoin market cap stands at $940.37 billion, an increase of 4.87% over the past 24 hours. The same market cap had initially fallen by 23.26% between June 6 and July 8.
Learn more: What are the best altcoins to invest in July 2024
Daily chart of cryptocurrency market capitalization, excluding BTC. Source: TradingView
If the value of 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 increased from $753.83 billion to $1.24 trillion in one 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.
“Altcoin market cap has reached a crucial longer-term support level and is finding support here. It’s still early in the week, but if this week continues on this uptrend, signs will start to improve.” van de Poppe gave his opinion on X.
Bitcoin Dominance Is Falling, Could Open the Way 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 must decline.
Using the weekly chart, we observe that BTC.D dropped from 62.69% in March 2021 to 40.89% in May of the same year. History shows that this is around the same time that many altcoins reached their all-time highs during 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 performance displayed in 2021, at least 75% of the top 50 altcoins must outperform Bitcoin.
According to Blockchaincenter data, only some cryptocurrencies including meme coinshave done so. Among them are Toncoin (TON), Pepe (PEPE), Kaspa (KAS) and Bonk (BONK).
As a result, the Altcoin Season Index over 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 move closer to retesting their all-time highs, putting BTC on the defensive.
Learn more: What are Altcoins? Alternative Cryptocurrencies Guide
Ethereum, Solana’s crucial role
Additionally, it is important to mention that Ethereum (ETH) has always acted as a catalyst to foster altcoin dominance.
Over the past few months, ETH has underperformed compared to BTC. However, Ethereum Spot ETF Approval Imminent could lead to a significant increase in the value of ETH.
If so, other altcoins could join the potential rally. In the case of Capo of Crypto, the update on ETH ETFs, as well as the official applications for Solana VanEck and 21Shares ETFs are the reason the analyst is bullish on altcoins.
“The selling pressure from the German government is being absorbed. All Ethereum spot ETF applicants have filed updated S-1s. VanEck & 21Shares have officially filed 19b-4s for Solana spot ETFs. I am bullish on the coming weeks, especially on altcoins.” Capo of Crypto wrote.
Based on the above analysis and market sentiment, altcoins seem poised for a strong rally. However, traders should keep an eye on them.
If selling pressure hits the market again, the rally could be invalidated. Moreover, if Ethereum does not receive impressive inflows into ETFs, cryptocurrencies could struggle to surge.
Disclaimer
In accordance with the Trust Project This price analysis article is provided for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing 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 PolicyAnd Disclaimer have been updated.