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Data suggests crypto market could be approaching the next altcoin season

Data suggests crypto market could be approaching the next altcoin season
Paul L.

Amid the ongoing crypto winter, most investors are looking for indicators and patterns to guide their entry and exit from the market while attempting to maximize profits. One of the monitored patterns is the altcoin season for alternative currencies known as altcoins, with indicators suggesting that this period might be on the cards. 

In particular, as of September 19, 69% of the top 50 coins have outperformed Bitcoin (BTC) in the last 90 days highlighting that ‘altcoin season’ is in play, according to Blockchain Center data

Altcoin season Index. Source: Blockchain Center.

Notably, according to the Blockchain Center Altcoin Season Index, an altcoin season is declared once 75% of the top 50 coins perform better than Bitcoin over three months(90 days). The overviewed coins exclude stablecoins and asset-backed cryptocurrencies. 

Bitcoin records negative returns 

Among the top 50 coins, liquid staking solution for Ethereum (ETH), LIDO (LDO) is the highest performing altcoin at 222.4% in 90 days, followed by Chiliz (CHZ), the token fuelling the fan voting platform at 154.6%. Elsewhere, Bitcoin has recorded losses of 6.6% over the period.

Performance of top 50 coins. Source: Blockchain Center

It is worth noting that the ‘altcoin season’ refers to a phase in the cryptocurrency market when altcoins outperform Bitcoin. However, this does not translate to guaranteed profits due to factors like market volatility. Therefore, the season offers an opportunity for crypto investors to diversify their portfolios.

In most cases, altcoins usually perform better during a bull market. Therefore, a significant number of altcoins outperforming Bitcoin might hint at a potential rally for both assets. 

At the same time, previous altcoin seasons have coincided with Bitcoin registering a high market dominance. In most cases, the altcoin season is usually characterized by investors moving their capital from Bitcoin to other assets. 

Bitcoin’s plunging dominance 

In this case, a possibility of altcoin season is potentially exhibited by the Bitcoin market dominance, which has been declining in recent days as capital flowed to other products. As per CoinMarketCap data, Bitcoin dominance stands at 39.3%. 

Bitcoin market dominance. Source: CoinMarketCap.

Furthermore, as investors monitor potential signs of an altcoin season, emphasis is placed on the correct entry and exit time. Notably, late entry or exit usually spreads risks on trading strategies. 

In the meantime, Bitcoin continues to struggle, consolidating around the $20,000 level. By press time, the flagship cryptocurrency was trading at $18,600 with losses of almost 7% in the last 24 hours. 

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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