The old currency led the rise, and the prelude to the mini "copycat season" has begun?
Author: BitpushNews
Recently, Bitcoin (BTC) has refreshed its all-time highs several times, once exceeding $123,000 per coin. Against the backdrop of Bitcoin's strong upward movement, there are significant signs of capital rotation within the crypto market, and a number of old large altcoins (Altcoin), which have been relatively quiet before, are gradually becoming active, and their gains have even surpassed the recent performance of Bitcoin.
CMC market data shows that among the top 20 crypto assets by market capitalization, some "metaverse" tier 1 (L1) altcoins have performed prominently, with double-digit gains on the 7th. Among the frontrunners is Stellar (XLM): the 12th largest crypto asset by market capitalization, with a weekly gain of 82%, leading the class among similar assets. ADA, which ranks 10th in market capitalization, rose nearly 30% in 7 days; Ripple (XRP) 29%; Dogecoin (DOGE) 18%.
Some relatively new altcoins, such as decentralized exchange (DEX)-focused L1 project Sei (SEI) and synthetic dollar protocol Ethena (ENA), also rose well, also rising more than 30% on the 7th.
According to a recent research report by Delphi Digital, the overall performance of established tokens with a long history and multiple bull and bear cycles since January of this year has even outperformed the AI and DePIN (Decentralized Physical Infrastructure Network) concept tokens, which were much in the spotlight at the time.
Analysts point out that the co-strength of established altcoins is interpreted as an early signal of retail money or positive repatriation, and these tokens represent cryptocurrencies that have existed in the crypto market for a long time and have a large market capitalization, and their activity often reflects the market participation and capital preferences of retail investors, while traders also keep an eye on emerging projects with innovative narratives and high growth potential.
Altcoin's "BANANA ZONE 2.0"
Market watcher @MerlijnTrader monitored the TOTAL3 chart, which tracks the total market capitalization of cryptocurrencies excluding Bitcoin (BTC) and Ethereum (ETH), which is a good indicator of the overall momentum of altcoins. He noted that the TOTAL3 chart is entering the "Banana Zone 2.0", which usually means that the market will have an explosive breakout phase after a period of consolidation.
The trader believes that the upcoming wave will be "bigger, faster, and backed by real-world use cases and huge amounts of money" compared to the 2020 altcoin wave. This is a sign that the altcoin market may no longer be just speculative frenzy, but more sustainable growth driven by fundamentals and institutional money.
The signal of the "copycat season".
According to the CMC Altcoin Season Index, 75% of the top 100 altcoins have outperformed Bitcoin in the last 90 days, excluding stablecoins and wrapped tokens, it officially enters the "altcoin season". This threshold reflects a broad market rotation of funds from Bitcoin dominance to diversified altcoin growth.
Currently, the altcoin quarterly index is 32/100, which is far from the threshold of 75 points, which indicates that the market is still in the Bitcoin dominant phase. However, the index has seen a positive upward trend recently (from 26 points last week to 32 points today), suggesting that early signs of rotation are emerging.
Key signals for altcoin season include:
- Increased altcoin dominance: In past altcoin seasons (such as May 2021), the total market capitalization of the top 100 altcoins used to exceed 130% of Bitcoin's total market capitalization. This expansion marks an increase in capital inflows into altcoins.
- Rapid price increases: Altcoins often experience drastic increases in a short period of time. At the beginning of 2021, large altcoins returned an average of 174%, far outpacing Bitcoin's modest growth of just 2% over the same period.
- FOMO Sentiment vs. Retail Investor Mania: Altcoin seasons are typically accompanied by high 24-hour trading volumes and strong bullish sentiment. Market optimism leads to increased buying pressure, further driving prices up and attracting new players to enter.
An important feature of the current market is the decline in Bitcoin Dominance. Crypto analyst Satori observes that in historical cycles, when the price of bitcoin has remained stable or moderately increased, while its share of the total crypto market capitalization has declined, this is often seen as a sign of a shift in funds from bitcoin to altcoins, thus heralding the possible arrival of an "altcoin season".
Satori noted that this pattern has been reflected in historical cycles such as 2017 and 2021. Altcoins are now starting to perform in general fashion, with trading volumes steadily rising, suggesting that institutional and retail investors may be diversifying their funds into alternative digital assets, due to a combination of catalysts:
- Launch of spot ETFs: U.S. spot Bitcoin and Ethereum ETFs provide compliant entry for institutional funds, unlocking a wealth of institutional liquidity. When these funds pour into Bitcoin and Ethereum, some of the funds may spill over and flow to altcoins with higher growth potential.
- Advancement of Layer 2 (L2) solutions: The development of L2 technology has improved the scalability and efficiency of L1 such as Ethereum, reduced transaction costs, and supported the implementation of more application scenarios, which in turn is beneficial to altcoins in its ecosystem.
- The combination of artificial intelligence (AI) and blockchain, the development of real-world asset (RWA) tokenization, and the improvement of blockchain gaming infrastructure have all brought new value narratives and application prospects to altcoins, providing fundamental support.
So, while it remains to be seen how long the "mini-knockoff season" will last, the positive signals from the market suggest that investors are re-embracing risk and injecting long-lost vitality into the market.