- The Altcoin Season Index calculates whether markets favor bitcoins or other cryptocurrencies
- Digital asset investors have turned to bitcoin all year as prices tumble
Only 15 of the top 50 cryptocurrencies by market value have outperformed bitcoin (BTC) in the past 90 days, indicating that we are still a long way from the much-loved “altcoin season.”
The Blockchain Center’s Altcoin Season Index measures the temperature of digital asset markets by separating sentiment into two heady modes: bitcoin and altcoin.
An “altcoin” is considered a derogatory label for much of the cryptocurrency industry, subtly denigrating anything that is not the original digital asset.
Still, the index is an effective tool for mapping where investors stand when it comes to diversifying away from blue chips.
How it works: Altcoin season arrived when over 75% of the top 50 cryptocurrencies (38 or more) outperformed BTC in the last 90 days. The index screens stablecoins and asset-backed tokens such as wrapped bitcoin and Lido staked ether.
On the other hand, we are firmly in bitcoin season if less than 25% of the top 50 digital assets have outperformed BTC.
The last extended season of altcoins was in 2021, between the end of March and the last week of June. At the time, BTC hovered around $60,000 before crashing 40% to $34,000.
But the crypto markets moved strongly towards bitcoin season throughout July 2021 and officially entered BTC mode for almost two weeks in August of the same year.
The Blockchain Center index has bounced between seasons for six months — except for two days in January, when crypto markets briefly propelled altcoin returns above those of bitcoin.
Bitcoin miners’ capitulation could invoke altcoin season
The index indicates that we are not currently in the big orange coin season. Still, the crypto markets have seen over 70 days of bitcoin season since early February, roughly half the total number of days so far.
Right now, we are a long way from altcoin season, with only 31% of the top 50 cryptocurrencies outperforming BTC in the last 90 days. But that could change quickly if bitcoin miners continue to feel pressure from low prices and macroeconomic factors driving up electricity costs.
“If miners continue to sell their BTC rewards in order to fund their operations, it could definitely amount to an altcoin season,” said Blockworks Research analyst Ryan Swanson.
Bearing in mind that this doesn’t mean altcoins are rising – they can also outperform bitcoin in a downtrend – Swanson explained that altcoin season has historically followed bitcoin season, after a rise in the price of BTC caused a shift of capital to riskier assets.
“However, the trend seems to be changing in the short term, given the specific pressures on miners and the emergence of “altcoins” that have their own market cycles, such as layer 1 tokens ether and solana, as well as [decentralized finance] offers like aave and MakerDAO [MKR]”Swanson said.
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