Nov 27, 2024

6thTrade


The strengthening momentum in Ethereum (ETH) has reignited calls for a potential altcoin season, even as Bitcoin (BTC) continues to struggle below the $100,000 mark. Analysts are optimistic about the broader altcoin market, driven by ETH’s robust performance and its influence as a sector benchmark.

Jake Ostrovskis, an options and OTC trader at Wintermute, noted that ETH’s improved outlook has catalyzed a capital shift toward altcoins. He explained:

“Is this time [for bullish calls] different? The market thinks so. ATM volatility spiking, skew pushing to 12-month highs, and wings (10d) seeing a strong bid.”

The Case for Altcoin Season

According to market signals, an implied volatility (IV) spike in ETH options reflects growing trader confidence. Such optimism could provide a tailwind for the altcoin market.

Crypto analyst Nicholas Merten of DataDash echoed this sentiment, pointing to falling Bitcoin dominance (BTC.D) as a precursor for potential altcoin rallies. He highlighted that the “Others” index, which tracks smaller altcoins beyond the top 10, had reclaimed significant levels, surpassing the 200-day moving average—a sign of improving momentum.

However, the Blockchain Center’s Altcoin Season Index tells a more cautious story. As of now, the index is near 50%, indicating that only half of the top 50 tokens—such as Stellar (XLM) and Dogecoin (DOGE)—have outperformed BTC in the past three months. A true altcoin season typically requires at least 75% of top tokens to beat BTC.

A Familiar Pattern?

Historical data suggests caution. Similar surges in July and September were short-lived as Bitcoin dominance regained strength. Whether this cycle will break the pattern remains uncertain.

On November 25, Ethereum and segments like Layer 2 solutions, GameFi, and DeFi saw double-digit gains, contrasting with BTC’s dip below $95,000. Despite this, Glassnode founders warned that a comprehensive altcoin rally would likely require BTC to breach $100,000, followed by a significant dominance decline.

“For a full-blown Altcoin season, we need BTC dominance to capitulate. Eyes on $100K—though a market shakeout may come first!”

ETH/BTC Ratio: Key to Sustainability

From an ETH/BTC perspective, the outlook remains cautiously optimistic. A sustained rally in this ratio typically signals ETH outperforming BTC, which could bolster the broader altcoin market.

Wintermute’s Ostrovskis, however, urged caution, pointing out that ETH/BTC trends lack the consistency needed to support a robust altcoin season. He remarked:

“For a full-blown ‘alt season’, #ETHBTC needs to sustain strength for more than a few sessions. Each bid in 2024 has been whacked, making the theme hugely important into year-end.”

Conclusion

While signs of an altcoin season are emerging, sustainability hinges on critical factors, including BTC dominance levels, ETH/BTC trends, and broader market momentum. Traders and investors should remain watchful of BTC’s price action and ETH’s ability to maintain its current trajectory.