More

    Analysts say this key metric suggests an altcoin season is at hand

    A series of new all-time highs from altcoins and a drop in the Bitcoin dominance metric has many analysts convinced that an alt season has started.

    Bitcoin’s (BTC) 65% recovery from sub-$29,500 on July 20 to a swing high of $48,200 on Aug. 14 took less than a month and helped bring fresh bullish momentum back to the crypto market and to traders who were dreading the prospect of another prolonged bear market.

    Currently, the BTC rally has stalled out near the $46,000 price level, and this phase of sideways trading is giving altcoins an opportunity to step forward. As shown in the chart below, the total market capitalization of the altcoin market has risen 80% since July 20. Meanwhile, the Bitcoin dominance rate is down 10% since July 30.

    Bitcoin dominance vs. total altcoin market capitalization,1-day chart. Source: TradingView

    Data from TradingView shows that the dominance rate of Bitcoin had been on the rise in recent weeks, but this trend fizzled out for Bitcoin on July 30 as a number of altcoin projects rallied due to a marketwide oversold bounce, new partnerships and protocol updates.

    DeFi and NFT projects hit record highs

    Projects with a focus on nonfungible tokens (NFTs) and decentralized finance (DeFi) were the leading altcoin gainers over the past four weeks. 

    Three of the biggest gainers over the past month include Axie Infinity Shards (AXS), Solana (SOL) and Terra (LUNA), which all saw their prices break out to new record highs on Aug. 17.

    AXS/USDT vs. SOL/USDT vs. LUNA/USDT 4-hour chart. Source: TradingView

    As shown above, AXS price surged nearly 400%, while LUNA and SOL increased by 340% and 187%, respectively.

    One interesting observation to note is that Solana and Terra began to see increased interest several days after the implementation of the London hard fork on the Ethereum network.

    While the London hard fork introduced several beneficial changes to the Ethereum network, including a token burning mechanism that has the potential to make Ether deflationary, the upgrade did little to solve the problem of high transaction costs. This left the door open for competing layer-one solutions like Solana and Terra to gain market share.

    Analysts announce the start of altcoin season

    The surge in altcoins has led many traders to forecast the dawn of a new altcoin season. According to “The Moon,” a pseudonymous Twitter analyst, altcoin seasons follow a major run-up in the price of BTC, especially when the price stalls or pulls back. 

    Further evidence pointing toward the start of an alt season is found in the increasing number of altcoins notching new all-time highs over the past two weeks. Double-digit daily gains and price breakouts from projects like Audius and memecoins like Dogecoin (DOGE) and Shiba Inu (SHIB) are making headlines, and Crypto Twitter is abuzz with chitter-chatter about the hottest altcoins to watch.

    Despite these strong performances, it’s interesting to note that the Altcoin Season Index is actually at its lowest point in two years, as highlighted in the tweet below.

    What this means, in the long run, is up for interpretation, but one bullish take is that the altcoin rally seen in the past two weeks is just a prelude to the real altcoin season, which has yet to begin.

    To date, Bitcoin continues to be the leading market indicator that dictates the future direction of the crypto market as a whole, but data shows that consolidation phases often give altcoins an opportunity to push higher.

    If Bitcoin’s price drops back toward $40,000 or below, then most analysts would expect altcoin prices to also move south. On the other hand, a rally above the $48,000 level is likely to see altcoin prices push higher. 

    Related articles

    Comments

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    Share article

    Latest articles

    Ethereum ‘about to go parabolic’ against Bitcoin as analysts weigh BTC bear case

    Ethereum’s Ether token (ETH) is due to launch a “parabolic” attack on BTC to beat all-time highs, one analyst believes.2-week predicts “crazy” ETH moveETH/BTC...

    ‘It’s going to be very obvious that every bank needs to become a crypto bank,’ says CEO of bank to nab 1st federal charter...

    Happy Thursday! Welcome to Distributed Ledger, our weekly crypto newsletter. I’m Frances Yue, crypto reporter at MarketWatch, and I’ll walk you through the latest...

    Academic research claims ETH is a ‘superior’ store of value to Bitcoin

    Australian university researchers have questioned Bitcoin’s reputation as the best store of value network in cryptocurrency, with Ethereum on track “to becoming the world’s...

    SHIBA INU: What the Charts Say Is Next for Shiba Inu

    It’s been a wild ride for Shiba Inu (CCC:SHIB-USD). The cryptocurrency got hot in early October, then exploded higher at the end of the...

    NEKTR Set to Become the World’s First Pro-Medical Cannabis NFT Gaming Platform

    RICHLAND, Wash., Dec. 2, 2021 /CNW/ -- At a time when most countries still maintain a tough legal regime prohibiting the use and supply...

    Newsletter

    Subscribe to stay updated.