- Altseason could have started already as there may not be a direct Bitcoin-to-altcoin rotation
- Money has started to flow out of memecoins and could all be going into altcoins
At the time of writing, the altcoin market cap and CEX volume ratio seemed to present some compelling insights. Not only did the altcoin market cap surge past $1.5 trillion, but the volume ratio of altcoins to Bitcoin stood at 2.7x – A sign of an upcoming altseason.
The hike indicated that stablecoin holders have been shifting towards alts, rather than directly converting BTC to altcoins. Interestingly, this isn’t a straightforward altseason driven by BTC’s dominance though. Rather, it’s been driven by trading volume, marking a shift in market behavior.
While Bitcoin’s influence on altseasons has been traditionally dictated by its market dominance, the ongoing trend entails trading volume is the new barometer for altcoin interest.
Source: CryptoQuant
However, the notion of an altseason could be deceptive. Although trading volumes for altcoins have spiked, this rise is selective, impacting only certain segments of the altcoin market.
This could mean that while some altcoins see significant gains, others might not benefit from the same level of investor enthusiasm. This selective enthusiasm hinted at a more nuanced, perhaps less robust altseason than in previous cycles, where a rising tide lifted all boats.
Where is money flowing into?
Tracking the Futures Open interest for memecoins such as PEPE, BONK, and WIF underlined distinct trends. The sharp decline in the Futures Open Interest for BONK and WIF, and a moderate downtick in PEPE suggested capital may be moving away from these memecoins.
Notably, PEPE’s interest peaked at around $1.20 billion, before descending. BONK and WIF saw highs of around $600 million and a subsequent drop, reflecting potential shifts in investor sentiment.
Source: X
This could imply that investors have been reallocating funds to more traditional alts, seeking stability or new opportunities.
Conversely, this exodus might not signal a full pivot to alts, but could indicate a broader market realignment or a retreat to fiat or stablecoins. Especially given the latest drop.
Why Altcoin Season Index needs to flip?
The Altcoin Season Index, sitting at 33, signaled that the market may be nearing a bottom, rather than being in the middle of an altseason. This index is a measure of alt performance against Bitcoin – A value above 75 means an altcoin season, while below 25 indicates a Bitcoin season.
Right now, altcoins are underperforming compared to Bitcoin, as shown by the index’s position well below the 75 threshold.
For a shift to an altseason, a sustained hike in altcoin strength relative to Bitcoin is needed. Such a hike should push the index upwards towards or past 75.
Source: Coinglass
On the other hand, if the index falls further, it could allude to sustained Bitcoin dominance, possibly driven by investor caution favoring more established assets.
Watching for a trend reversal in the index will be key to anticipating any potential altseason.
