The cryptocurrency market is showing signs of an upcoming 'altcoin season', a period characterized by strong price increases of other assets relative to Bitcoin. During this time, investors often shift their attention and capital flows to altcoins.
Currently, several important indicators are gradually showing a change in market dynamics. The following analysis will clarify some of these factors.
The altcoin season may have begun
One of the notable indicators is the upward trend of TOTAL3, a measure of the total market capitalization of all cryptocurrencies except Bitcoin and Ethereum. As of now, this index reached $933 billion, up 35% since the beginning of the month. To clarify further, the market capitalization of this asset group has increased by an additional $212 billion in just the past 22 days.
TOTAL3 daily chart | Source: TradingView
As TOTAL3 approaches its all-time high of $1.13 trillion, this indicates that investors are allocating more capital into altcoins. Notably, the increase in TOTAL3 occurs against the backdrop of Bitcoin's dominance rate (BTC.D) being in an adjustment phase.
Data from the daily chart shows that BTC.D has fluctuated between 61% and 58% since November 8th. Currently, BTC.D stands at 59.30%.
When TOTAL3 rises sharply while BTC.D adjusts, this is an important indicator that an altcoin season may occur. This means that investors are shifting their attention from Bitcoin to other cryptocurrencies, leading to increased demand and the possibility of altcoin prices continuing to rise sharply.
BTC.D daily chart | Source: TradingView
Furthermore, a new report from on-chain data provider CryptoQuant also indicates that the value of some Layer 1 altcoins has significantly increased since the U.S. presidential election, confirming the potential for an altcoin season to be forming.
"Cryptocurrencies such as XRP, TRON (TRX), TON, ADA, and SOL have seen strong price increases, thanks to expectations that the new U.S. administration will adopt a more cryptocurrency-friendly policy," the report from CryptoQuant emphasized.
In addition, CryptoQuant also explains that the increase in spot trading volume has accompanied this price rise.
"The daily spot trading volume of altcoins has significantly increased after the U.S. presidential election, reaching a peak of $18 billion on November 11th – the highest level since the beginning of August. Previously, the spot trading volume of altcoins had remained low since May."
Spot trading volume of Bitcoin and Altcoins | Source: CryptoQuant
Altcoins may need more time
Although the above indicators suggest a high likelihood of an altcoin season occurring in the short term, it is important to note that this is only confirmed when at least 75% of the top 50 altcoins outperform Bitcoin over a three-month period.
Altcoin season index | Source: Blockchain Center
However, data from Blockchain Center shows that only 43% of the top altcoins have outperformed Bitcoin in the past 90 days – much lower than the 75% threshold needed to officially declare an altcoin season.
