On December 4th, the altcoin season index reached 88, suggesting that cryptocurrencies outside of Bitcoin may perform better than the leading cryptocurrency. However, the chances for an altcoin season have taken a significant hit.
Nevertheless, it seems that the long-awaited altcoin season still has the potential to return. Here are three signs that many cryptocurrencies in the top 50 may soon witness significant growth.
Altcoins continue to be constrained.
The altcoin season is a period when altcoins experience growth that outpaces Bitcoin. The altcoin season index measures this trend, determining whether 75% of the top 50 cryptocurrencies are outperforming Bitcoin.
Typically, an index value above 75 indicates the start of the altcoin season, while a value at 25 reflects Bitcoin's dominance. However, currently, the index has fallen to 49, indicating a retreat of altcoins as Bitcoin regains a stronger position in the market.
Despite this decline, the altcoin season seems not to be over. One indicator of this is Bitcoin's dominance ratio.
An increase in Bitcoin's dominance ratio typically indicates a growing preference for Bitcoin over altcoins, especially during uncertain market phases. This trend suggests that investors view Bitcoin as a safer choice, thanks to its relative stability and established position in the market.
As the dominance ratio increases, interest in smaller cryptocurrencies may decline, leading to a potential decrease in capital flowing into altcoins. A few weeks ago, Bitcoin's dominance ratio climbed to 62%, indicating that altcoins may no longer play a secondary role.
However, at this moment, this index has dropped to 58.82%, indicating that altcoins have regained some market share. If this decline continues, BTC prices may drop while altcoin prices could soar.
Altcoin market capitalization may still recover.
TOTAL2 market capitalization, tracking the top 125 altcoins, has recently dropped to $1.35 trillion, indicating that assets outside of Bitcoin are underperforming. This decline often signals that the altcoin season might be delayed, as Bitcoin dominates the market.
However, hope remains as TOTAL2 breaks through a descending triangle, signaling a potential trend reversal. Although the altcoin season may be struggling at this time, this breakout suggests that altcoins could regain momentum if trading volume begins to rise.
If this volume increases, the market capitalization of TOTAL2 could rise to $1.65 trillion, marking a revival of the altcoin season and potentially driving the values of these coins higher.