Analysts say this key metric suggests an altcoin season is at hand

0
31

The 65% Bitcoin (BTC) recovery from below $ 29,500 on July 20 to a swing high of $ 48,200 on August 14 lasted less than a month and helped bring a fresh bullish momentum to the crypto market and traders who feared the possibility of another prolone bear. market.

Currently the BTC rally has stopped close to the price of $ 46,000 and this phase of side trading gives altcoins a chance to move forward. As shown in the chart below, the total market capitalization of the altcoin market has risen 80% since July 20th. Meanwhile, Bitcoin’s dominance has declined by 10% since July 30th.

729c83cf 3f2a 4627 b608 cdade4941ddf
Bitcoin dominance versus total altcoin market capitalization 1-day chart. Source: TradingView

TradingView data shows that the dominance rate of Bitcoin high currencies has grown in recent weeks, but this trend flared up for Bitcoin on July 30, as a number of altcoin projects grew due to a market oversold rebound, new partnerships and protocol updates. .

DeFi and NFT projects have reached record highs

Projects with a focus on NFTs and decentralized finance (DeFi) have been the main altcoin winners over the past four weeks.

Three of the biggest winners over the past month include Axie Infinity (AXS), Solana (SOL) and Terra (LUNA), all of which saw their prices explode to new record highs on August 17th.

3faa4032 cbc4 4d7b a4f2 5766e0921274
AXS / USDT against SOL / USDT against LUNA / USDT 4-hour chart. Source: TradingView

As shown above, AXS price grew by almost 400%, while LUNA and SOL increased by 340% and 187% respectively.

One interesting finding is that Solana and Terra began to increase interest several days after the implementation of the London hard fork in the Ethereum network.

While the London hard fork has introduced several beneficial changes to the Ethereum network, including a token burning mechanism that can make Ether deflationary, the upgrade has little to solve the problem of high transaction costs. This left the door open for competitive solutions — one like Solana and Terra to gain market share.

Related: Eth2 stake contract ranks as the largest Ether hodler with $ 21.5B

Analysts announce the start of altcoin season

The rise of altcoin currencies has led many traders to predict the twilight of a new altcoin season. According to The Moon, a pseudonymous Twitter analyst, altcoin seasons follow a significant price hike in the price of BTC, especially when the price stops or falls.

Further evidence that points to the start of high season is found in the growing number of high currencies that are hitting new all-time highs over the past two weeks. Two-digit daily earnings and price explosions from projects like Audius and self-currencies like Dogecoin (DOGE) and Shiba Inu (SHIB) are in vogue and crypto Twitter is in vogue with chatter about the hottest currencies to watch.

Despite these strong performances, it is interesting to note that the Altcoin Season Index is actually at its lowest point in 2 years, as highlighted in the tweet below.

What this means, in the long run, is ready for interpretation, but one bullish take is that the altcoin rally seen in the past 2 weeks is just an introduction of the real altcoin season that has yet to begin.

So far Bitcoin is still the main market indicator that dictates the future direction of the crypto market in general, but data shows that consolidation phases often give high currencies a chance to move forward.

If Bitcoin price falls back to $ 40,000 or less, then most analysts would expect altcoin prices to move south as well. On the other hand, an accumulation above the $ 48,000 level will likely see altcoin prices higher.

The opinions and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and business move involves risk, you need to do your own research when deciding.