Here are all the reasons why a true altcoin season isn’t here yet

With risk-off sentiment nonetheless hanging over the market, traders have been rotating capital into altcoins. Such a transfer has traditionally helped mitigate losses by spreading publicity, slightly than placing all funds into one place.

The Altcoin Season Index has jumped again to ranges we final noticed in early January. This typically alerts the beginning of a broader rotation. On the time of writing, ETH/BTC was up 2.6% intraday, including additional weight to this setup.

On the flip aspect, Bitcoin dominance [BTC.D] posted three weekly decrease lows and hasn’t been in a position to reclaim the 60% mark. In reality, the identical is now down almost 2.5%. Taken collectively, it could be a traditional rotational setup, with altcoins gaining momentum as BTC cools off.

Supply: TradingView (BTC.D)

That mentioned, a full-blown altcoin season nonetheless seems to be manner off.

The ETH/BTC ratio is sitting at a key inflection level. After the mid-January breakdown, it failed to carry 0.033 as assist, triggering a correction. Again then, nonetheless, the altcoin season finally kicked off.

That divergence confirmed traders had been chasing hype-driven performs over initiatives with actual utility. Now, with the Altcoin Season Index leaping and ETH/BTC chopping sideways, an analogous dynamic could be forming.

Naturally, the large query – Are traders nonetheless favoring Bitcoin’s threat/reward over “high-cap” altcoins? In that case, the continuing weak point in BTC.D might be short-term, with out triggering a significant rotation into altcoins.

Bitcoin dominance in inflows might sign on-chain energy

On-chain metrics highlighted a transparent shift in investor positioning. 

The bounce within the Altcoin Season Index, together with a range-bound ETH/BTC ratio, appeared to again AMBCrypto’s view that traders could also be chasing yield by speculative performs slightly than shifting into blockchains throughout market FUD.

CryptoQuant data confirmed this development – At press time, Bitcoin buying and selling volumes on Binance had regained dominance, making up 36.8% of complete trade quantity. As compared, altcoins accounted for 35.3% and Ethereum 27.8%.

Supply: CryptoQuant

Trying again, altcoins represented 59.2% of Binance buying and selling volumes in November. By mid-February that share had fallen to 33.6%, marking virtually a 50% drop in altcoin exercise – A transparent signal of capital rotating again into BTC.

All this on-chain information has merely bolstered AMBCrypto’s thesis.

Even with the current altcoin bounce, a full-blown alt season nonetheless seems to be unlikely. Traders are both chasing Bitcoin’s threat/reward or short-term speculative performs slightly than Ethereum [ETH], protecting a broad altcoin rotation at bay.

Last Abstract

• Whereas Altcoin Season Index and ETH/BTC hinted at short-term exercise, BTC dominance and inflows alluded to capital nonetheless flowing in the direction of Bitcoin.
• On-chain metrics and buying and selling quantity shifts revealed traders chasing speculative performs slightly than broad L1 adoption.