The cryptocurrency market is on the cusp of a potential shift as signs suggest the long-awaited altcoin season may soon be upon us.
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Bitcoin’s dominance is likely to fall, and altcoins may see steeper hikes than in previous patterns.
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Altcoins may be in a position for greater gains in the long term.
While Bitcoin [BTC] is still above $100k on the price charts, Google Search trends have been declining somewhat. Now, while this suggests that traders are sufficiently engaged in BTC, it also alludes to the potential for an altcoin season.
Especially if BTC’s dominance starts to decline.
Looming Alts Dominance Amid Reducing BTC Supply for LTHs
The UTXO age bands revealed a drop in holders keeping the crypto for mid-to-long periods. Historically, such a finding has set off price rallies, resulting in hikes for altcoins. The more people bought Bitcoin and others sold, the market share of BTC reached its highest point, only for money to start flowing towards altcoins later. The ongoing trend seems to be diverging in the other direction.
In fact, even with higher prices, the number of older UTXO bands has not shrunk that much – a sign that long-term holders are being cautious. Maybe this was the reason why Bitcoin always bounced back mildly while altcoins dropped much further.
Source: CryptoQuant
However, the general drop-off still seems visible. Altcoins usually improve their performance in the latter half of each cycle. Even though the prevailing market might be somewhat hesitant, it shows that distribution might be on the way. If Bitcoin rises above certain resistance levels, money might begin to move from Bitcoin to altcoins, potentially pushing them higher.
On the contrary, if holders stay strong and new investors are not as active, altcoins may continue to fall behind the market. So far, being patient has been wise, especially since alts might still get their chance according to usual market trends. Additionally, major BTC holders have been reducing their supply lately, hinting at a fall in long-term holdings. This could further signify the potential for an altcoin season.
Altcoins’ Bulls vs. Bear Markets
That’s not all, as at press time, macro trends seem to indicate that the altcoin bear market might end soon. However, the bull market has yet to start. Historically, both 2016 and 2020 marked lows in the market before significant bull markets started. The signal resembles the lows, suggesting that conditions may be ideal for a new round of growth.
Therefore, the next 1–3 years might see very different conditions, resulting in stronger altcoin gains since the market has been consolidating for longer.
Source: TradingView
Finally, the CMC Altcoin Season Index had a reading of 22 at press time. This indicated that an altcoin season is not happening anytime soon. While altcoins do have a significant market share, the same hasn’t risen considerably over the past few months.
Even so, there’s room for some optimism. While the altcoin market may not be in a bull phase right now, previous trends and the current macro situation may cause one soon.
Conclusion
In summary, while Bitcoin continues to dominate the crypto space, the signs of an impending altcoin season are becoming more prominent. Investors and traders should remain vigilant, as shifting trends could provide lucrative opportunities in the not-too-distant future. Staying informed and adaptable is crucial as the market evolves.
