Since the start of the year, significant price fluctuations have occurred in the cryptocurrency market, with Bitcoin (BTC) being the frontrunner, notwithstanding Bitcoin’s remarkable performance, the eagerly awaited altcoin era has yet to come to pass
There is a growing inquiry among altcoin enthusiasts regarding the adequacy of the prevailing trends in Ethereum (ETH) and other altcoins to incite this market transition.
The Market Dominance of Bitcoin
Bitcoin maintains an authoritative position within the cryptocurrency industry. Bitcoin maintains a market capitalization dominance of over 50%, as reported by CoinMarketCap. This indicates that BTC is associated with a market capitalization of over 50%.
The substantial dominance plays a crucial role in impeding the initiation of an altcoin season by constraining the market share that other cryptocurrencies can acquire.
The Altcoin Season Index: An Indicator Of Changes In The Market
One pivotal metric utilized to evaluate the commencement of altcoin season is blockchaincenter.net’s Altcoin Season Index. At present, the value of this index is 35. The altcoin season cannot be deemed formal until the index reaches 75.
This threshold is met when 75% of the top 50 altcoins outperform Bitcoin. Although certain altcoins have exhibited robust performance, overarching market trends suggest that the current period does not yet qualify as an altcoin season.
Ethereum, which is ranked second in terms of market capitalization, has exhibited substantial ascents. As evidenced by its Relative Strength Index (RSI), Ethereum has sustained a robust bullish trajectory during its current trading session at around $3,889.
Throughout history, Ethereum rallies have frequently indicated that altcoin season has begun. However, to validate this trend, more comprehensive market metrics must converge.
Although Bitcoin and Ethereum are the subject of significant media attention, several alternative cryptocurrencies are creating a stir with their impressive gains. Pepe (PEPE) has grown by more than one thousand percent over the last three months, significantly outperforming Bitcoin.
In the same time frame, Dogwifhat (WIF) has experienced a substantial surge of almost 900%, indicating robust bullish patterns. These lesser-known altcoins are generating substantial investor interest, causing regional market capitalization fluctuations.
Total crypto market cap at $2.5 trillion on the daily chart: TradingView.com
Cap of the Market And Investor Conduct
The approximate market capitalization of cryptocurrencies is $2.55 trillion. Altcoins comprise less than 50% of this, with Ethereum representing 18%.
To attain greater immediate profits, investors frequently transition their holdings from Bitcoin to alternative cryptocurrencies (altcoins), particularly in instances where the price of Bitcoin stabilizes. This conduct can potentially increase the value of altcoins and reallocate market capital to these lesser-known cryptocurrencies.
Notwithstanding the robust performance exhibited by specific altcoins, the overall altcoin season is being impeded by several factors. Beginning traders may find Bitcoin unattractive due to its exorbitant cost; instead, they might opt to allocate their investments towards alternative cryptocurrencies that are priced lower.
Furthermore, to officially usher in an altcoin era, market capital must be substantially reallocated from Bitcoin to alternative cryptocurrencies. This transition does not exclusively rely on the performance of a limited number of alternative coins; rather, it necessitates a more extensive and consistent performance surpassing that of Bitcoin among the leading 50 cryptocurrencies.