Key Points
- Market analysts predict the arrival of the altcoin season, citing a strengthening Ethereum [ETH] price and momentum.
- The sustainability of the current altcoin trend depends on Bitcoin’s performance and market dominance.
The much-anticipated altcoin season might be upon us, as suggested by market analysts who point to the strengthening price and momentum of Ethereum (ETH).
ETH, often considered the sector’s health barometer, has a positive outlook that is fuelling the altcoin season predictions.
ETH’s Positive Outlook
Jake Ostrovskis, an options and OTC (Over The Counter) trader at Wintermute, has noted that the positive outlook for ETH is driving capital towards altcoins.
This bullish sentiment, indicated by a spike in implied volatility (IV), suggests options traders are confident about ETH’s prospects, which could, in turn, boost the altcoin segment.
Altcoin Season Status
Nicholas Merten of DataDash echoed this sentiment on YouTube, pointing to the declining dominance of Bitcoin (BTC) as a precursor to a potential altcoin rally.
Merten noted that the altcoin sector, excluding the top 10 tokens, had regained key levels and was above the 200-day moving average (MA).
This suggests increased momentum in the segment and the potential for further growth.
However, according to the Blockchain Center’s Altcoin Season Index, we are not yet experiencing a full-blown ‘Altcoin season’.
The index reading is around 50%, indicating that only half of the top 50 tokens, such as Stellar [XLM] and Dogecoin [DOGE], have outperformed BTC in the last three months.
An altcoin season can only be declared when over 75% of top tokens outperform BTC.
This trend of altcoin momentum was also observed in July and September, but it faltered when BTC’s dominance increased.
The question now is whether the current trend will be different and sustainable.
On November 25th, Ethereum, L2s, GameFi, and DeFi segments saw double-digit rallies as BTC dipped below $95K.
However, the founders of Glassnode warn that a full-blown altcoin rally can only occur if BTC surpasses $100K, followed by a decrease in market dominance.
From an ETH/BTC perspective, the outlook appears cautiously optimistic. A rally in the ETH/BTC ratio indicates ETH outperforming BTC, which is a positive sign for altcoins.
However, according to Ostrovskis, the ETHBTC trend isn’t clear enough to predict a strong, sustainable altcoin season, at least for now.
