It happens every cycle. During a bull run, Bitcoin reaches some kind of temporal stability and traders get bored. And if a sharp drop in prices mixes with that, traders run out of the building through the window. It‘s human nature. It’s Altseason. The grass is always greener on the other side.
And by “greener” we mean, there seems to be a lot more money in the Altcoins. And that can only mean one thing: it‘s Altcoin season. As Arcane Research’s chart shows, Bitcoin‘s percentage of the total market capitalization of cryptocurrencies is at 51.8%. That’s the lowest level in two years.
Percentage of total Market Capitalization | Source: Arcane Research
In April, the middle-sized cryptocurrencies by market capitalization took the biggest portion of the cake. Every altcoin outperformed Bitcoin, even the large-sized ones, who also took a beating. And if the indicators are pointing in the right direction, the season is just starting.
This time is different: Altcoins are performing tremendously
What a difference seven months make. The previous time an Altseason seemed to appear on the horizon, Bitcoinist told you:
Sentiment surrounding altcoins has been poor for years, so no money has been coming in. But DeFi, Bitcoin breaking $10,000, and other perfect storm scenarios made the conditions ideal for capital to finally come back into crypto. In just a few months, the market has re-added billions, and a new generation of tokens was born, all while doomsday for the dollar has been approaching.
From the vantage point of the present, we know how DeFi is slowly but surely conquering the world. We‘ve seen the constant innovation that the Altcoin space is producing. We can feel the energy those new projects brought to the cryptocurrency ecosystem. It’s as Bitcoinist told you three months ago:
Whats interesting here is that unlike the altcoin boom of 2017, where most currencies simply gained traction because of the hype surrounding them, this time around the growth of most tokens is being driven by innovation and real-life use cases.
ETH to BTC chart on Bitstamp | Source: ETH/BTC on TradingView.com
Money flowing into Altseason
The theory says that each Altseason, Bitcoin loses a bit less of its total percentage. And then, it regains about half of what it lost. It‘s not a precise theory. In Spring 2017’s Altseason, Bitcoin‘s dominance shrunk to 38%. It slowly gained it back, until Winter 2017/ 2018’s Altseason arrived. At that time, Bitcoins dominance got to 32%.
All of that means that, if the indicators are pointing in the right direction, this Altseason is just starting. If Bitcoin‘s market capitalization dominance falls from 51% to the 30%-range, that’s a lot of money entering the Altcoins market. And this time, we mean “a lot.”