Smart contract platforms like Ethereum are slowly outperforming Bitcoin. While this trend continues and ETH is reaching highs for the year against BTC, signs of a possible “altcoin season” are beginning to emerge. However, is the term still applicable in the current context?
Is the Altcoin Season Coming?
For years, traders have longed for the altcoin season, when small-cap coins generate two- to three-digit returns within weeks. Although the capitalization of the global crypto market is currently $ 2.4 trillion, there are potential signs that reflect previous altcoin seasons.
ETH / BTC outbreak: The price of ETH versus Bitcoin hits a 42-month high.
– After the ETH had set the last two annual highs (January and April of this year), there were strong growth phases for the largest altcoin as well as for altcoins with a smaller market capitalization.
– If ETH / BTC sustained above 0.08 it could lead to higher risk demand and trigger crypto markets.
Historical data also shows that altcoins generally do well in December.
Monthly price increase: December has a historic average return of 38% for cryptocurrencies excluding Bitcoin.
– The infamous bull market of 2017 peaked in early January 2018 after many altcoins nearly tripled in December.
– Many in the market are anticipating potentially bullish price action due to this historical precedent, despite a 30% increase in the fourth quarter.
BTC and ETH flow net on the stock exchange calculationCome ngAhy 02.12.2021 | StupidNoise: IntoTheBlock
TicontinueAccumulation: The extent to which Bitcoin and ETH are leaving centralized exchanges reflects positive year-end expectations.
– Almost $ 10 billion in bitcoin left centralized exchanges in the fourth quarter.
– $ 5.6 billion in ETH also left the exchange, which is 1.05% of market capitalization, compared to 0.88% of Bitcoin leaving the floor.
CollectHas the term “altcoin season” changed in the current context??
The term certainly sounds out of date as the crypto space expands beyond the realm of currencies to include various use cases.
Different sectors in the crypto space have established their own trends during previous bull markets, resulting in lower correlations over longer periods of time.
– This can be seen with DeFi tokens in summer 2020, then with NFT in summer 2021 and more recently with Metaverse-related tokens.
– When the “altcoin season” comes, it could benefit some industries more than others.
– One final warning is that fears of a new variant of Covid-Omicron and the broader macro environment could ruin hopes that the crypto market could soar in the event of a panic attack later this year.
As mentioned earlier, sectors in the cryptocurrency market are setting different trends. While the Layer 1 blockchain performed better a few weeks ago, Polygon, the Ethereum-based Layer 2 ecosystem, posted a return of 34% this week.
Large trading volume from MATIC as of December 2nd | Source: IntoTheBlock
Polygon has seen positive developments in terms of both on-chain activity and ecosystem news.
– As seen above, the large increase in trading volume with the 2-fold MATIC price breakout shows a high level of trust on the part of the institutions.
– Polygon introduces its third zk rollup solution Midas to support the scaling of Ethereum.
– The listing of an Exchange Traded Product (ETP) from MATIC in Europe is intended to stimulate the inflows into the tokens.
Minimum price of PUNK | Source: IntoTheBlock
On the other hand, CryptoPunks and NFTs are overall right after the summer hype cycle.
– The minimum price of CryptoPunks has fallen by more than $ 100,000 in the last month.
– The trading volume across the NFT space has fallen by 26% just this week, according to CryptoSlam.
Gala and Enjiin also corrected this week after strong gains due to the Metaverse hype by over 20%.
In conclusion, the up and down movements in these sectors suggest that we may focus more on cycles for a particular group of tokens due to recent trends and momentum.
Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews