On December 4, the Altcoin Season Index reached 88, suggesting that cryptocurrencies other than Bit could outperform the top coin. However, as of the 22nd, the index has dropped to 45. The possibility of an Altcoin season may have taken a major hit.
Nevertheless, there is a possibility that the anticipated season could return. There are three indicators that suggest many of the top 50 cryptocurrencies could soon see notable gains.
Bit's resurgence... Altcoins need a turnaround
Altcoin season refers to a period when Altcoins outperform Bit in terms of market value growth. The Altcoin Season Index measures this trend, determining if over 75% of the top 50 cryptocurrencies are outperforming Bit.
Generally, an index value above 75 signals the start of an Altcoin season, while 25 reflects Bit's dominance. However, the current index of 49 suggests that Altcoins are regaining Bit's stronger position in the market.
Despite the decline, the Altcoin season may not be over. One indicator suggesting this is Bit Dominance (BTC.D).
The increase in Bit Dominance indicates a growing preference for Bit, especially during periods of market uncertainty. This trend suggests investors view Bit as a relatively stable and established market position, making it a safer option.
As dominance rises, interest in smaller cryptocurrencies may decrease, leading to a reduction in capital inflow to Altcoins. A few weeks ago, Bit Dominance rose to 62%, suggesting Altcoins may not continue to play a secondary role.
However, at the time of writing, it has dropped to 58.82%, indicating Altcoins have regained some control. If the decline continues, Bit prices may fall, and Altcoin prices may rise.
Potential for Altcoin Market Cap Increase
The TOTAL2 market capitalization, which tracks the top 125 Altcoins, has recently fallen to $1.35 trillion, suggesting underperformance of non-Bit assets. This decline often indicates a delay in the Altcoin season, showing Bit's dominance in the market.
However, the positive is that TOTAL2 has broken out of a descending triangle, signaling a potential trend reversal. While the Altcoin season may currently be facing difficulties, this breakout suggests Altcoins could gain momentum.
If this trading volume increases, the TOTAL2 market capitalization could rise to $1.65 trillion, reviving the possibility of an Altcoin season and driving prices higher.
