Bitrabo Editorial
As the cryptocurrency market experiences dynamic price changes this year, Bitcoin has been the driving force. However, the expected altcoin season has not materialized yet, leaving enthusiasts wondering about the current trajectories of Ethereum and other alternative cryptocurrencies.
Bitcoin’s Dominance in the Market
Bitcoin maintains a strong grip on the cryptocurrency market. With a dominance level exceeding 50%, as reported by CoinMarketCap, more than half of the market capitalization is linked to BTC. This dominance poses a significant obstacle to the emergence of an altcoin season by restricting the market share available for other digital assets.
Altcoin Season Index: A Measure of Market Dynamics
The Altcoin Season Index provided by blockchaincenter.net is a key metric for gauging the onset of an altcoin season. Currently standing at 35, the index needs to reach 75 for an official altcoin season declaration. This milestone is attained when 75% of the top 50 altcoins outperform Bitcoin, signaling the market shift towards altcoins.
Ethereum, the second-largest cryptocurrency by market capitalization, has demonstrated significant upward movements, currently trading at around $3,889. While Ethereum’s positive performance often heralds the start of an altcoin season, broader market indicators must align for this pattern to be confirmed.
Though Bitcoin and Ethereum dominate the market discussion, smaller altcoins like Pepe (PEPE) and Dogwifhat (WIF) are experiencing notable gains, with PEPE surging over 1,000% in the past three months and WIF increasing by almost 900% during the same period.
Market Capitalization and Investor Trends
The total cryptocurrency market capitalization hovers around $2.55 trillion, with altcoins holding less than 50% of this value, and Ethereum alone commanding 18%. Investors often chase short-term gains by shifting investments from Bitcoin to altcoins, particularly when Bitcoin stabilizes in price, which can lead to a surge in altcoin prices and a redistribution of market capitalization towards these smaller assets.
Despite the impressive performance of individual altcoins, several factors are stalling the broader altcoin season. Bitcoin’s high price may deter new traders who prefer lower-priced altcoins for investment. Moreover, a substantial redistribution of market capitalization from Bitcoin to altcoins is necessary for a full-fledged altcoin season. This shift demands not just the superior performance of select altcoins but a consistent outperformance of Bitcoins across the top 50 cryptocurrencies.
Featured image from Pintu, chart from TradingView