The cryptocurrency market is currently electric with optimism and excitement for the next altseason, a period when altcoins rise dramatically in value compared to Bitcoin. Nic Puckrin, the CEO and Co-founder of Coinbureau, has identified three key prerequisites. With these conditions that need to be fulfilled, we can finally begin to see a true altseason take place. These conditions are the altcoin season index, the Bitcoin dominance, and macroeconomic factors.
Altcoin Season Index
The altcoin season index is a very important indicator to assess the performance of altcoins compared to Bitcoin. As of now, the index is down to 21, indicating that Bitcoin is still crushing most of the altcoin market. In the past, altseasons have only happened when the index crosses 75, which means the wide-alphabet strength among a large majority of altcoins.
An index reading over 75 shows intense positive momentum sweeping the entire altcoin market. Traders and investors alike often use this threshold to indicate the start of an altseason. It’s a clear sign that the tide is turning in favor of altcoins in the market. As long as the index does not hit this high, Bitcoin will most probably continue to be the most dominating power in the cryptocurrency arena.
Bitcoin Dominance
Bitcoin dominance—which measures the percentage of total crypto market cap that Bitcoin makes up—is a third major indicator. Puckrin wants to stress that we need Bitcoin dominance to stop increasing. In addition, it needs to go below the 54% mark to start an altseason. A continued drop in Bitcoin dominance would be a sign that investors are moving their money into altcoins. This shift is making those alternative cryptocurrencies much more valuable.
At present, Bitcoin’s dominance remains well above this key threshold, reaffirming its power over the overall market. For altcoins to really succeed, money needs to flow out of Bitcoin and into other cryptocurrencies. This change usually happens when investors see more growth potential in altcoins or when Bitcoin starts to move sideways.
Macroeconomic Factors
Aside from the behavior of the internal crypto market, macroeconomic considerations are incredibly important to whether or not an altseason will begin. Puckrin notes that the US Federal Reserve must cease all Quantitative Tightening (QT) measures and confirm incoming rate cuts to counter current interest rates above 4%. These moves would not only splash liquidity into the market but set up a more accommodative backdrop for risk assets across the board with crypto included.
Historically, loose monetary policy from the Federal Reserve has a direct impact on investor confidence and risk appetite. Meanwhile, the expectation of a lower interest rate environment can cause money to flow into riskier, higher-growth investments such as altcoins. Without these external macroeconomic supportive conditions, an altseason can barely find its traction even with the most positive internal market indicators.
Market Overview
Fast forward to today, the total crypto market has shot back up past the $3 trillion needle. This impressive jump up follows a bullish trend that played out throughout the past week. Though notably, market trading volume is down 16.82% and valued at $68.83 billion, showing that investors may be a bit wary. If we are to see a real altseason, Bitcoin will need to clear above its previous all-time high, injecting even more confidence into the market.
