Has Altcoin Season Already Begun?

Last week saw crypto markets in a consistent upward momentum, propelled by increased buyer activity. The rally is predominantly spearheaded by Bitcoin, which successfully breached the crucial resistance level at $36,000.

Crypto investors are keeping a close eye on the emergence of the altcoin season, where the returns from low-cap coins often outweigh the higher risks, especially when diversifying an investment portfolio. One telltale sign of this transitional phase is the surge in trading volume among altcoins, now constituting over 50% of the total turnover.

The overall capitalization of the altcoin market has surged by over 30% over two weeks, reaching $650 billion in November. This shift underscores traders’ escalating interest toward altcoins, boosting their prices.

Analysts’ Predictions 

If the altcoin capitalization continues to move towards $700 billion, the market can enter the altcoin season phase — a scenario supported by many analysts.

Crypto Analyst Stockmoney Lizards predicts an approaching altcoin season based on past observations where the altcoin market cap surged following Bitcoin’s halving event. These analyses indicate that historically, the altcoin market capitalization hit its pinnacle about 500 days after the halving. 

If history repeats, the current movement might be just a precursor to a potential surge of four to eight times during the altcoin market, a phenomenon that might not manifest until the next two years. 

Adding to the discussion, Analyst Crypto Clearly highlights the importance of traditional finance inflow during a crypto bull market. This typically commences with Bitcoin’s surge, followed by Ethereum taking the spotlight. Subsequently, capital gradually shifts towards various altcoins, starting from larger ones. When the smaller-cap altcoins begin soaring exponentially, it often signifies the conclusion of the altcoin season.

Another perspective from Crypto Bitcoin Chris complements this pattern, emphasizing the trajectory of progression during the altcoin season, irrespective of market capitalization. According to Chris, the novelty of a project holds substantial weight. Generally, the market favors projects that introduce cutting-edge technologies at the onset, positioning them as the frontrunners of each market cycle. This phase is often followed by the ascension of lesser-known altcoins that still possess market value.

Large-cap Altcoins Are in a Bull Market

According to the analyses presented, the current phase appears to be witnessing a bull market in large-cap tokens. Recent data sourced from CoinMarketCap highlights substantial gains among the top 10 altcoins by market capitalization, boasting double-digit growth rates within the last 30 to 60 days.

For instance, Ripple (XRP), amidst its legal victories against the Securities and Exchange Commission, has surged by 51% over the past 60 days. The positive outcome from legal battles has significantly boosted investor confidence, and rumors suggest an impending initial public offering announcement by Ripple on Nov 9.

Among the altcoins, Solana (SOL) has garnered substantial attention from investors. Over the last three months, SOL has shown remarkable growth, marking a surge of over 100% within the past 60 days. This rally comes as the project continues to regain traction and expand its user base following the aftermath of the FTX collapse. 

Similar to SOL, Chainlink (LINK) has also observed a two-fold increase in price in the last 60 days, attributed to consistent development and adoption. 

Other notable performances include BNB, ADA, TRX and MATIC, all of which showcased double-digit gains over a 2-month period.

This surge in the altcoin market’s performance seems to align with an upswing in investor sentiment. A metric reflecting this sentiment is the Crypto Fear & Greed Index, which transitioned from a fearful state in September to a state of greed by late October, a trend that has remained unaltered thus far. 

Bearish Scenario Probability

Nonetheless, this trajectory might see a reversal if the anticipated positive catalysts fail to materialize or deliver the expected outcomes. JPMorgan analysts recently released a report casting doubt on investors’ expectations. Below are key points:

  • The introduction of spot ETFs is expected to primarily redirect capital from existing investment ventures (such as Grayscale Bitcoin Trust (OTC: GBTC)), rather than generating fresh demand.
  • Unresolved SEC litigations are unlikely to sway regulatory sentiment in favor of cryptocurrencies. Instead, regulatory measures are projected to toughen with the evolving regulatory environment.
  • The impact of halving remains uncertain; any effect from the reduction in rewards is already accounted for in the asset prices.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.