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The cryptosphere is evolving and each new season brings its own surprises and opportunities. Lately, warning signs suggest that we may be on the cusp of a new altcoin season. Are the indicators favorable? Answers in this article.
Bitcoin Rise: Harbinger of Altcoin Season?
Bitcoin could soon come out of its doldrums. At the beginning of the week, its price was around $67,700. The lack of trading volume and speculative interest suggested that the flagship cryptocurrency was not ready for a strong uptrend. However, the situation has started to change in the last 24 hours.
Bitcoin ETFs saw $886 million in inflows on Tuesday, June 4th, according to data from Farside Investors.
This massive buy level could trigger a big move and spur speculators and investors into action.
The influx of funds into Bitcoin ETFs may herald renewed interest in cryptocurrencies in general. In fact, altcoins could benefit from this.
Analysis of crypto transaction volumes
The recent influx into Bitcoin ETFs could be interpreted as a wake-up call for the crypto market.
Historically, increased interest in Bitcoin often precedes the altcoin season, when alternative cryptocurrencies see price increases.
This dynamic is explained by the fact that when investors make significant profits with Bitcoin, they tend to diversify their portfolios by investing in altcoins.
Speculators play a key role in triggering crypto market movements. As Bitcoin purchases increase, it is likely that speculators will begin to look more closely at altcoins.
This attention could quickly translate into higher trading volumes and prices for altcoins. This would mark the beginning of a new altcoin season.
This attention could quickly translate into higher trading volumes and prices for altcoins. This would mark the beginning of a new altcoin season.
Ethernity Cloud founder Losif Peterfi says:
As Bitcoin continues to show its resilience after the recent bear market, we should soon see the start of the altcoin season. The current momentum, supported by increasing institutional interest and regulatory clarity, combined with the effects of the halving, positions us favorably for strong growth. We expect a significant shift as altcoins take advantage of Bitcoin’s stability, attract new investor confidence and trigger significant market activity.
Losif Peterfi, founder of Ethernity Cloud
Altcoin Season Indicator: Where Are We?
The altcoin season indicator showed a value of 31, according to data from BlockchainCentre.
This index has fallen from 80 to 31 in the last six months. Interestingly, this indicator was at a high level a year ago, during the bear market where Bitcoin was trading around $25,000 and altcoins were in a consolidation or long-term decline.
In 2021, from January to June, Bitcoin’s dominance dropped from 72% to 40.4%. During this period, the market cap of altcoins (excluding ETH) increased from $122 billion to $934 billion. This pattern suggests that a significant decline in Bitcoin (BTC.D) dominance is necessary to kick off a true altcoin season.
Currently, while other cryptocurrencies may do well thanks to the enthusiasm for Bitcoin, only a select few altcoins could outperform Bitcoin. For the altcoin season indicator to climb above 75, there would have to be widespread euphoria throughout the altcoin ecosystem. However, given the growing number of altcoins, gains could be concentrated in a handful of them rather than causing a large-scale bullish wave.
Bitcoin Dominance: The Key Factor
The Bitcoin Dominance (BTC.D) chart represents the BTC market cap as a percentage of the total crypto market cap. As of April, this dominance ranged between 53.9% and 56.3%.
It is currently bouncing off the lows of this range, indicating that Bitcoin is growing faster than the rest of the crypto market, including Ethereum (ETH).
A strong downtrend in the Bitcoin Dominance chart is necessary for a true altcoin season to begin. This would mean that investors are massively shifting their funds from Bitcoin to altcoins, creating a favorable momentum for altcoin price growth.
Investors should keep a close eye on Bitcoin’s dominance. A significant decline in this dominance could signal the beginning of the altcoin season. However, it is crucial to remain vigilant and choose wisely which altcoins to invest in.
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Fascinated by Bitcoin since 2017, Evariste continued to research the topic. If his first interest was trading, now he is actively trying to understand all the developments focused on cryptocurrencies. As an editor, he strives to consistently deliver high-quality work that reflects the state of the industry as a whole.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.