Do current market conditions such as spot Ethereum ETFs, Bitcoin volatility and Bitcoin volatility point to an imminent altcoin craze? Continue reading.
The crypto market experienced a series of critical changes in recent weeks that kept everyone on their toes. This turmoil started when the now-defunct Mt. Gox exchange started Bitcoin fell sharply when it was unable to pay its creditors (BTC() Prices, triggering panic and fueling speculation about the end of bull runs.
The German government sold off its cryptocurrency holdings in large quantities, further lowering the price of BTC to $53,700 on July 5, adding to the unpredictability.
Bitcoin recovered to $58,000 despite these losses, as the Mt. The German market sell-off and Mt.
But the game-changer was a shocking incident with former U.S. Presiden Donald Trump. Trump is well-known for being pro crypto. shot Right ear at a political event
The speculation around Trump’s political return and the positive impact it could have on the cryptocurrency market was a major catalyst after the attacks.
Bitcoin’s value soared to more than $63,000 on July 14 and briefly touched $65,000 before finally settling down at $64,937 when this was being written.
The market is already volatile, but another big development is on its way: Ethereum spot (ETH) ETFs.
SEC has given preliminary approval to three out of eight asset managers that are interested in launching spot ETFs. The final approval depends on their submission of S-1 documents by regulators before the end of the week.
On July 22, the SEC is expected to give the go-ahead to the approved asset managers including VanEck and Franklin Templeton. Trading in the new products will begin that day. next Day, July 23,
What does it mean for altcoins, with these ripples in the market? Were we at the beginning of an altcoin mania, or would BTC and ETH remain dominant?
We’ll examine the market data to see if an altcoin boom is on the horizon.
Altcoin dominance takes a hit
Recent volatility on the altcoin markets requires a look at important statistics.
Bitcoin is the first thing we’ll discuss dominance. BTC has increased its dominance since November 20, 2022. Bitcoin was then around 40% of the entire crypto market. Then, it climbed steadily until April 2024 when it reached over 56%. It has been fluctuating between 54%-56% since then. As of July 16, it was at 55%.
The dominance of altcoins (excluding the top 10 coins in terms of market capital) is also increasing. followed a different pattern. The dominance of altcoins was at a high point in January 2022, but dropped as low as 8,22% by the end of June 2023. After a slight recovery in March 2024 to 13.4% dominance, the altcoin dominance dropped again by about 10% on July 16, after Bitcoin had reached its record high.
Ethereum was the major driver for any rise in dominance of altcoins. As ETH price increased, so did altcoin dominance, although other altcoins were not as popular.
This dynamic can be seen in the Altcoin Season Index. measures The performance of altcoins in relation to Bitcoin. A typical Altcoin Season will be active when over 75% of top 50 altcoins outperform BTC.
The crypto market began to gain strength in October 2023. In January 2024 the index rose from 16 to an all-time high of 84, indicating that a new altcoin era was beginning.
Altcoins were displaced by the spot BTC ETFs and, in 2024, this index would drop to just 16. As BTC lost steam recently, altcoins gained momentum, and the index rose from 16 to 46. This was the fastest rise since January.
Mt. The market fell again as the German fears and repayments of Mt.
Ethereum is a key player in the movement of these altcoins. When Ethereum’s price increased, so did the Altcoin Season Index, which shows Ethereum as a main booster of the entire altcoin industry.
This index must remain consistently above 75 for several weeks or months before a true altcoin season can begin. Bitcoin is likely to continue dominating until that time, and Ethereum will play a major supporting role.
Are we about to enter the altcoin season?
Many of the altcoins speculations are based on the historical and upcoming patterns in the cryptocurrency market.
Wise Advice is a crypto analyst who says that the altcoin seasons often coincide with Bitcoin’s halving. After each Bitcoin halving that reduces block rewards for mining new Bitcoins, Bitcoin prices tend to rise about one to two years afterward.
The price of Bitcoin is soaring, and Ethereum as well as other altcoins are also rising. During the November 2021 third halving bull-run, Bitcoin’s price reached its ATH. Shortly afterward, Ethereum also hit its ATH.
Previous halvings of altcoins such as Solana (SOL), Polkadot (DOTAvalancheAVAX) also saw their ATHs following Bitcoin’s rally.
This pattern can be explained by the money flow in the markets. Initial investors rush to Bitcoin driving up its price. Bitcoin investors reinvest their profits in Ethereum or other altcoins. Because of the smaller market capitalization of altcoins like Ethereum, even relatively small inflows of capital can lead to substantial price increases.
The cycle of investing from Bitcoin, to Ethereum, and finally to altcoins results in a temporary decline in Bitcoin’s dominance. This opens the door for an altcoin rally and ultimately towards altcoin season.
Yann Allemann is the co-founder and CEO of Glassnode. He pointed to a recent rotation in which riskier equity assets performed better than more stable ones. This could be a signal that a similar change has occurred on the cryptomarket.
He suggests we could see altcoin values rise by 400% if the rotation is continued. In 2020, a similar shift resulted in a 400% rise in the value of altcoins over that time. next Four months.
These predictions may seem promising, but it is important to proceed with caution. While the market has inherent volatility, there are opportunities to gain, as well as risks.
Do your homework, keep yourself informed and don’t make decisions solely based on the hype.
Disclosure article This is not investment advice. This page is intended for informational purposes only.
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Source: crypto.news