Crypto: The signs of an Altcoin season ahead

The crypto sphere is evolving, and every new season brings its share of surprises and opportunities. Recently, warning signs suggest that we might be on the brink of a new altcoin season. Are the indicators favorable? Find out in this article.

A Bitcoin Surge: A Harbinger of an Altcoin Season?

Bitcoin could soon awaken from its slumber. At the start of the week, its price hovered around $67,700. The lack of trading volume and speculative interest suggested that the leading crypto wasn’t ready for a strong bullish trend. However, the situation has begun to change over the past 24 hours.

According to data from Farside Investors, Bitcoin ETFs saw an influx of $886 million on Tuesday, June 4th.

This level of massive buying could trigger a major shift and encourage speculators and investors to take action.

An influx of funds into Bitcoin ETFs can be a precursor to renewed interest in cryptocurrencies in general. Indeed, altcoins could well benefit from this.

An 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 an altcoin season, where alternative cryptocurrencies see their prices rise.

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 crucial role in triggering crypto market movements. With the increase in Bitcoin purchases, it is likely that speculators will start to take a closer look at altcoins.

This attention could quickly translate into a rise in transaction volumes and prices for altcoins, marking the start of a new altcoin season.

This attention could quickly translate into a rise in transaction volumes and prices for altcoins, marking the start of a new altcoin season.

The founder of Ethernity Cloud, Iosif Peterfi, states:

As Bitcoin shows its resilience after the recent bear market, we should soon witness the start of an altcoin season. The current momentum, fueled by growing institutional interest and regulatory clarity, combined with the effects of the halving, places us in a favorable position for a strong rally. We anticipate a significant shift as altcoins take advantage of Bitcoin’s stability, garnering fresh investor confidence and triggering substantial market activity.

Iosif Peterfi, founder of Ethernity Cloud

The Altcoin Season Indicator: Where Do We Stand?

The altcoin season indicator, according to data from BlockchainCentre, showed a reading of 31.

This index has fallen from 80 to 31 over the past six months. It is interesting to note that this indicator was at a high level a year ago, during the bear market where Bitcoin traded around $25,000, and altcoins were in a phase of consolidation or long-term decline.

In 2021, from January to June, Bitcoin’s dominance fell from 72% to 40.4%. During this period, the market capitalization of altcoins (excluding ETH) went from $122 billion to $934 billion. This pattern suggests that a significant drop in Bitcoin dominance (BTC.D) is necessary for a true altcoin season to begin.

Currently, even if other cryptocurrencies may perform well due to enthusiasm for Bitcoin, only a few selected altcoins might outperform Bitcoin. For the altcoin season indicator to rise above 75, there would need to be widespread euphoria across the altcoin ecosystem. However, given the increasing number of altcoins, gains could be concentrated in a handful rather than causing a widespread bullish wave.

Bitcoin Dominance: A Key Factor

The Bitcoin dominance chart (BTC.D) represents the market capitalization of BTC as a percentage of the total crypto market capitalization. Since April, this dominance has formed a range between 53.9% and 56.3%.

Currently, it is bouncing off the lows of this range, indicating that Bitcoin is growing faster than the rest of the crypto market, including Ethereum [ETH].

For a true altcoin season to begin, a strong downtrend in the Bitcoin dominance chart is necessary. This would mean that investors are massively shifting their funds from Bitcoin to altcoins, creating a favorable dynamic for an altcoin price increase.

Investors should closely monitor Bitcoin dominance. A significant drop in this dominance could signal the start of an altcoin season. However, it is crucial to remain vigilant and exercise discernment in the choice of altcoins to invest in.