While Bitcoin has surged over 61% in the past three months, many altcoins have struggled to keep pace. While some, like Stellar (XLM) and Cardano (ADA), have seen significant gains, others like Tron (TRX) and Toncoin have lagged behind.
Bitcoin’s Role in Altcoin Season
CryptoQuant CEO Ki Young Ju attributes the delay in altcoin season to a shift in the type of capital flowing into Bitcoin. Unlike previous cycles, where retail investors dominated the market, institutional investors and spot exchange-traded funds (ETFs) now drive Bitcoin demand.
Why is altcoin season delayed?
— Ki Young Ju (@ki_young_ju) November 27, 2024
Compared to the last cycle, the nature of capital flowing into #Bitcoin has shifted. The current Bitcoin rally is primarily driven by demand from institutional investors and spot ETFs.
Unlike crypto exchange users, institutional investors and ETF… pic.twitter.com/dpDBCF0BTo
These institutional investors, unlike retail traders, are less likely to rotate their holdings into altcoins, impacting market liquidity. Ju emphasized that a significant influx of fresh capital to crypto exchanges is crucial for altcoins to achieve broader market growth.
Bitcoin Dominance and Altcoin Season
Market analysts have been closely monitoring Bitcoin’s dominance, a metric that measures Bitcoin’s market capitalization relative to the entire cryptocurrency market. Historically, when Bitcoin’s dominance decreases, it often signals the start of an altcoin season.
#Bitcoin reaching the green line means it has expanded to the extent where its market cap begins to rotate substantially into #altcoins.
— TechDev (@TechDev_52) November 27, 2024
It’s the signal that fires every 4 years prior to the macro decline in Bitcoin dominance known around here as “altseason”. pic.twitter.com/2FAdPxbMnK
TechDev, a crypto analyst, noted that capital typically rotates into altcoins when Bitcoin’s dominance reaches a certain threshold, often marked by the 200-week simple moving average (SMA). Rekt Capital, another prominent analyst, also highlighted the potential for altcoin growth as Bitcoin’s dominance retraces.
#BTC Dominance
— Rekt Capital (@rektcapital) November 27, 2024
We saw the effects of the best-case scenario in full force
It was a full-blown #Altseason
Retrace in $BTC DOM to 57.68% enabled this Altcoin Window
Continued dips to green will enable Altcoin breakouts
After that, #Bitcoin will become dominant again#Crypto https://t.co/9neDaQGUpt pic.twitter.com/yiMu9OU1Lv
However, both analysts cautioned that Bitcoin is likely to regain dominance after any significant altcoin rally.
While Bitcoin‘s recent rally has been impressive, the broader altcoin market has shown mixed performance. The delay in altcoin season is attributed to factors such as institutional dominance in Bitcoin, limited liquidity, and the need for fresh capital inflows. As Bitcoin’s dominance continues to evolve, market participants will be closely watching for signs of a potential altcoin season.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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