Market analysts attribute the delay of altcoin season despite Bitcoin rallies to BTC dominance and the immense influence of institutional capital.
In recent, altcoins have experienced mixed price actions, largely contrasting the steady rally by Bitcoin. For context, Bitcoin has surged by over 70% to $97.5K since the onset of September, significantly outperforming altcoins. The outcome is unsurprising since some have three-month gains below 30%.
Except for XRPs 350% and Cardano (ADA) 268% price growth, other altcoins gains, including Toncoin (TON) and Tron (TRX) trail the Bitcoin performance. Specifically, TRX is up 33%, slightly ahead of TON at 31% in its 90-day trajectory.
A reflection of the altcoins’ performance reveals suppressed gains for most altcoins. Analysts consider the Stellar (XLM) 420% surge an outlier as they ponder factors fueling the suppressed outcomes for altcoins.
Bitcoin’s Role in Market Participation
Crypto analysts consider the delay in the widely anticipated altseason emerging from the changing dynamics within the BTC’s market participation. CryptoQuant chief executive Ki Young Ju attributes the challenge to the changes in the capital type flows relative to the previous market cycles.
The CryptoQuant executive indicates institutional investors and spot exchange-traded funds (ETFs) fuel the demand for Bitcoin. Such deviates from earlier bull runs where the retail-driven capital flows dominated the space. Unlike retail users, institutional entities hardly rotate their BTC holdings into altcoins. Such divergence impacts the market liquidity.
Additionally, Ju reiterated that the altcoin market value is still suppressed and below its peak. He acknowledges that a substantial influx of fresh capital flowing to the crypto exchanges is critical for the altcoins to attain broader market growth.
The chief executive added that Bitcoin’s future growth depends on sustained institutional participation. Also, ETFs and government-backed initiatives favor Bitcoin, leaving the retail-driven altcoin heavily dependent on independent strategies to appeal for fresh investments.
Bitcoin Decline to Trigger Altcoin Season
The market analysts examine the historical patterns to predict when the altseason begins. Crypto analyst TechDev examined Bitcoin’s dominance relative to its relationship with the altcoin performance.
In his insights, TechDev illustrates that the capital typically rotates to fuel altcoin prices whenever the Bitcoin dominance crosses above a certain milestone – indicated by the 200-week simple moving average (SMA). The analyst considers this rotation to occur every four years, resulting in declined BTC dominance.
Rekt Capital entertains a similar argument on Bitcoin dominance. The prominent analyst illustrated that the recent retracement in BTC to 57.68% suggests the opportunity to trigger altcoin growth.
Further decline in BTC dominance would present opportunities for the altcoin breakout performance. The analyst also forecasted that BTC would reclaim dominance after the altcoin rally.
Is Ethereum 10% Gain Signal Altcoin Season Start?
While Bitcoin enjoyed a lift mid-week, Ethereum topped the show with 10% intraday gains in 24 hours. The altcoin king reclaimed 13% of the entire 3.3 trillion market cap.
Despite Ethereum gaining 10.66%, Bitcoin jumped 4% against the dollar within 24 hours. Ethereum still trails in the dust this year, with Bitcoin nearly threefold. The huge gap affirms the divergence in their market momentum.
Ethereum often shines when Bitcoin slows the roll. A review of Wednesday, November 27 events was no exception. ETH attained daily trade volume to emerge as the top trading pair alongside Tether (USDT) and ahead of the US dollar, USDC, and Euro.
Scrutiny in the derivatives space had Ether witness $56M liquidations with $47.7M from the short positions. While trading at $3,645, ETH still has a 24% journey to reclaim the 2021 peak of $4,800.
The upward momentum sparks optimism among Ethereum enthusiasts, with analyst Tony Severino indicating that the SuperTrend suggests a buy signal. Per the analyst, Ether rallying 120%, as witnessed after the 2023 signal, would elevate the price to $7,500.
The recent climb suggests the crypto scene is bound to witness a major shake-up with traders attracted to the altcoins. The Altcoin Season Index (ASI) by Blockchaincenter.net has a 65% score, thus edging closer to the 75% threshold for it to become an altcoin season. Sustained momentum is necessary to defend recent rallies for the altcoins season to begin.
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