Altcoin Season Starts When Bitcoin Prices Drop, Here's Why!

Bittime - In recent weeks, many altcoins have started to perform better than Bitcoin (BTC). This makes optimism among investors even higher regarding the Altcoin Season (Altseason) getting closer. 

One of the most prominent indicators is the Altcoin Season Index, which is now at its highest level since January 2024. The index shows that altcoins are starting to dominate the market. 

One of the main reasons behind this phenomenon is the decline in Bitcoin's dominance in the market, which has now fallen to around 55.80%. Along with this decline, altcoins such as Stellar (XLM), Hedera (HBAR), and Ripple (XRP) started to steal the spotlight. 

However, analysts have different views on what is actually driving this move. Some argue that this shift is not just about a rotation of liquidity away from Bitcoin, but rather a major change in the way people trade crypto, especially through stablecoins and fiat pairs.

Altcoin Season: What Happened to Bitcoin?

Source: Blockchaincenter

Altcoin Season Index is an indicator that measures the performance of the top 50 coins compared to Bitcoin. Typically, if the index is below 25, it means Bitcoin is still dominating the market. 

However, if the index reaches 75 or above, as currently seen at 78, this signals the start of altcoin season. Currently, most of the altcoins are surpassing Bitcoin, which means the altcoin market is in a very positive phase.

Since hitting a high in January 2024, the altcoin market has started to roar, with coins like XLM, HBAR, and XRP leading the rise. However, Ki Young Ju, CEO of CryptoQuant, stated that the main factor influencing the current movement of altcoins is not Bitcoin's liquidity rotation. 

Ju explained that the surge in altcoin prices was driven more by the increasing use of stablecoins and fiat pairs, which attracted new capital to the crypto market.

According to Ju, "Alt season is no longer defined by asset rotation away from Bitcoin. The surge in altcoin trading volume is not driven by BTC pairs, but by stablecoin and fiat pairs, reflecting true market growth," he said.

Read also: When Does Altcoin Season (Altseason) Occur? 3 Important Indicators for Confirmation

Why Is Bitcoin Declining?

Bitcoin, which has long been known as the crypto market leader, is in a consolidation phase after reaching its highest price recently. Bitcoin prices move between $91,000 and $100,000 (around IDR 1.4 billion to IDR 1.6 billion). 

Even though Bitcoin prices are still at high levels, the decline in Bitcoin's market dominance indicates a significant flow of funds into altcoins. Examples include Ethereum (ETH) and others. 

Rekt Capital, a crypto analyst, revealed that with Bitcoin's price range stabilizing, altcoins like Ethereum will likely be the main beneficiaries, directing fund flows to other smaller coins.

"Bitcoin being in the $91,000 to $100,000 price range could be a recipe for Ethereum to take over and allow funds to flow into smaller Altcoins," Rekt Capital said.

Read also: TOP 5 Altcoins Targeted by Whale Holders, Potential to Skyrocket 10X by 2025?

Projected Increase in Altcoin Market Capitalization

Sumber: BeIn Crypto

Additionally, technical analysis of TOTAL2, an indicator that measures the market capitalization of top 125 altcoins, shows a pattern bull flag which indicates a potential continuation of the bullish trend. 

Bull flag itself is a chart pattern that indicates that after a short period of consolidation, the price could continue its significant increase. 

If this prediction is correct, then the market capitalization of altcoins could exceed $1.45 trillion (around IDR 23,000 trillion), and the prices of many altcoins could surpass their record highs.

However, if Bitcoin dominance rises again to 60%, this altcoin season may fade. Therefore, currently there is still a lot of uncertainty regarding how the market will move in the future.

Supporting Factors for Altcoin Season

Many believe that this altcoin season will last longer, with the following factors supporting this prediction:

Inflow Institusional: Ethereum, one of the largest altcoins, is gaining huge attention from institutional investors. This further strengthens expectations that other altcoins will also continue to rise.

Potential ETF for XRP: Speculation regarding the launch of an ETF for XRP by BlackRock and JP Morgan increasingly makes the market believe that altcoins will continue to grow. If these rumors come true, this could be a major turning point for XRP and other altcoins.

Stablecoin Usage Growth: The use of stablecoins in crypto trading is becoming more widespread. This allows new capital to enter the market, which in turn supports altcoin performance.

Read also: Bitcoin and Altcoin Price Predictions in December, Get Ready!

Altcoin Season Starting?

With strong indications from the Altcoin Season Index reaching its highest level since January, as well as a greater liquidity shift towards altcoins, many believe that we are entering the altcoin season phase. 

Although Bitcoin remains king in the crypto market, the dominance of altcoins is gaining strength as new funds enter the market.

However, the crypto market is highly volatile, and although many factors support altcoins, market movements can change quickly. Investors are advised to continue monitoring market developments and be prepared to face the possibility of rapid and unexpected price movements.

FAQ About Altcoin Season

What Is Altcoin Season?

Altcoin Season is a period where altcoins record much better performance compared to Bitcoin in the crypto market.

How Does Altcoin Season Index Work?

The Altcoin Season Index works by calculating the percentage of the top 50 altcoins (by market capitalization) that outperform Bitcoin over a selected time period. 

When to Use the Altcoin Season Index?

The Altcoin Season Index is especially useful in situations where the crypto market is showing signs of significant change. For example, after a long period of Bitcoin dominance, it is possible that altcoins will start to take over the market's attention.

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Reference: 

BeIn Crypto, BeIn Crypto article, accessed December 3, 2024.

Blockchaincenter, Altcoin Season Index, accessed December 3, 2024.

Author: Y