The crypto market, ever since late 2021, hasn't been particularly strong, owing to the collapse of Bitcoin from $69,000 to as low as $15,000 over the course of 18 months.
During these 18 months, Bitcoin and the altcoins (cryptocurrencies apart from Bitcoin) witnessed drastic crashes, with some cryptocurrencies plunging as much as 90% from their previous highs.
While Bitcoin has had a fairly strong hold over the market and drags the altcoins along with it when it goes up or down, there are times when these altcoins decouple from Bitcoin and rally regardless.
These "decoupling times" are called altcoin seasons.
Bitcoin has been fairly bullish in 2023 but still has too much of a hold on the altcoins. Ethereum for example, has rallied over the last few months but is now unable to break through $2,000 despite having enough raw potential to do so.
Is an altcoin season close at this point?
If yes, how close is it? And if not, when will it happen? Let's dive in.
In terms of the Bitcoin versus Altcoin debate, Bitcoin's dominance over the market is still very strong.
According to CoinMarketCap, the benchmark cryptocurrency has a dominance of 46.2% over the market. This means that Bitcoin's grip on the market is a very strong one.
This is one of the first arguments against an impending altcoin season because for the Altcoins to decouple and rally, Bitcoin still has to lose some of its dominance.
One particularly interesting and useful tool for determining whether the market is in "Bitcoin season" or "altcoin season" is the altcoin season index indicator chart as shown below.
As shown above, the black line on the chart fluctuates between the two blue lines and can be used to determine how close we are to a bitcoin or altcoin season, and how deep into either season we are.
The chart shows that we are, in fact, deep in a Bitcoin season.
As shown by the chart above, Bitcoin is doing pretty well, compared to the top 50 altcoins, excluding stablecoins and other asset-backed tokens.
It can only be considered an altcoin season if 75% of these altcoins have performed better than Bitcoin over the last 90 days.
As an improvement in traditional market sentiment would spur investor interest in pursuing better returns through bitcoin and eventually altcoins, it is probable that a full-on altcoin season will not begin until then.
According to a tweet from Micro Economist and analyst, Henrik Zeberg, an altcoin season "isn't here… yet".
Zeberg says that greed still needs to kick in before this happens, and will come in as soon as the US Federal Reserve "seems to be done".
According to the chart above, the Altcoin Cycle Signal remains well within Bitcoin territory, corroborating Zeberg's verdict.
For now, the mid-term outlook of Bitcoin still applies to the Altcoins. If an altcoin season is to begin, Ethereum will first outperform Bitcoin over a wide margin.
After this, other large-cap cryptocurrencies will follow, after which investors will begin to invest in riskier altcoins, ushering in the next altcoin season.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.