Published in cooperation between Binance and the Gilroy Dispatch
Altcoin season is typically when cryptocurrencies other than Bitcoin experience high gains and increased volatility. Many are predicting that Bitcoin’s new record high has put the brakes on it, but is altcoin season still alive and well?
When Bitcoin dominance shrinks, and increased gains come from elsewhere in the cryptomarket, altcoin season has arrived. Many had been predicting it was on the way, with others saying it had already arrived. Yet this week, Bitcoin staged a comeback, pushing to new heights. This has left questions over the altcoin season and whether it will start at all.
September and October in Cryptocurrencies
September has historically not been kind to crypto markets, and this year was no different. Binance noted that crypto prices had taken a hit to the tune of $300 billion. They added that the total crypto market cap dropped to $3.7 trillion, with BTC down 6 percent, ETH down 13 percent, and Solana down 20 percent. Despite the selloff, the BTC Rainbow Chart showed the market was still in a mid-bull phase, historically prone to sharp pullbacks. While they noted that there were not yet signs of mania, this weekend proved their prediction was to come true.
By Sunday, Oct. 5, Bitcoin had risen to new highs of $125,245.57, signalling a rise of almost 2.7 percent. Previously, in the middle of August, it had stood at $124,480. However, the circumstances could not have been more different. August signalled sentiment buoyed by much more crypto-friendly regulations on the horizon for the US. This time, it was caused by investors rushing to Bitcoin as a safe-haven asset during a government shutdown.
On Friday, the 3rd of October, the US dollar had shrunk in comparison to many of the world’s major currencies. While in part due to the shutdown, inflows into Bitcoin ETFs had pushed the price of the cryptocurrency up. As the shutdown became the longest in history, signs are that more people opted for Bitcoin as a safe haven.
Is Altcoin Season Over?
All of this pushed the dominance of Bitcoin up to 60 percent. The big question is whether this is a broader expansion and a healthy signal for the market, or if it will be at the cost of altcoins.
This rotation has been on the card since August, when Binance noted that Bitcoin dominance dropped to 57.3 percent while Ethereum rose to 14.2 percent, with corporate treasuries holding 4.44M ETH (3.67 percent of supply). There also was a huge growth in the stablecoin market, which they highlighted with USDe as an example. The supply grew 43.5 percent in August to US$12.2B, capturing 4 percent of the stablecoin market. It became the fastest asset to surpass US$10B, reaching the milestone in 536 days versus USDC’s 903 and USDT’s 2000+.
Figures differ in regard to what actually signals altcoin season in terms of dominance. Yet an average from most exchanges is around 54 percent, which Bitcoin is way above. However, there is a significant chance this may soon switch should it fail to push way above this level. This could result in what is known as an “altcoin pump.” If it does continue, then an altcoin season may just be delayed by a few weeks.
Key Indicators
What needs to be examined carefully are the upcoming key economic indicators. However, with a shutdown in place, these have not come as they normally do. This left many investors trading in the dark, which can be a very uncertain time. Key data on the producer price index, nonfarm payrolls and unemployment was not available.
It also is becoming increasingly apparent that, despite Bitcoin’s volatility, it is being seen as a safe-haven asset. As it has climbed, so has the value of gold. It was up by 50 percent in the year-to-date as of October 6, showing both are being looked to in times of economic uncertainty.
It is not only US data that is causing a headache, either. Debt in Europe and Japan is also helping it reach record highs. As currency prices fall, Bitcoin is not linked and so is being viewed as a safe investment just as gold is.
Is Altcoin Season Actually Here?
Despite Bitcoin’s dominance, there are signals that Altcoin season is still in full swing. Bitcoin has always done well in October, averaging a 21.59 percent gain in most years. After this, altcoins almost always follow suit with a rise in value. The trick is predicting which altcoins will provide the biggest gains.
The fourth quarter has also always been a period when altcoins have outpaced Bitcoin. A great example of this was in 2021 when SOL beat Bitcoin by 90 percent. This year, we have already seen ETH climb 52 percent in comparison to Bitcoin’s 38 percent. The difference is that this cycle has the added benefit of stablecoins and increased trading volumes. This suggests that this is a broader rally than previous ones.
Was October the last month in which to buy before prices increase greatly? There is always a push toward the festive season, with a slight tail off in January. The trick is to determine which altcoins will climb the highest. While the price rises of altcoin season may be delayed due to a lack of economic data, there are signs that it is coming.
