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Recent months have seen significant growth in newer sectors of the cryptocurrency market, particularly in decentralized finance (DeFi) and meme coins. However, experts remain uncertain whether this period marks the beginning of a full altcoin season, commonly referred to as “altseason,” or if we are merely witnessing isolated surges. This insight comes from a report by the blockchain analytics platform Nansen.
Meme Coins Take the Lead
An altcoin season is characterized by a prolonged period during which alternative cryptocurrencies outperform Bitcoin (BTC), the leading cryptocurrency. Unlike isolated price spikes, these seasons generally last from a few weeks to several months. During these periods, only a select few coins tend to thrive based on prevailing market narratives.
Historically, two major altcoin seasons occurred: one in late 2017 to early 2018 and another from late 2020 to early 2021. These cycles highlighted consistent growth in well-established tokens, yet the real excitement was generated by newer, emerging tokens that led the performance metrics. Long-term holders of older tokens also began to sell off, seeking profits from their investments, while newer tokens benefited from the enthusiasm surrounding innovative technologies.
The report notes that previous cycles have seen phases centered around various trends, including initial coin offerings (ICOs), DeFi, and non-fungible tokens (NFTs). Each phase exemplifies the cyclical evolution of the cryptocurrency market, with one wave building on the foundations set by its predecessor.
As we move towards late 2023 and early 2024, another potentially lucrative window for altcoins is opening up. Yet, the report suggests that despite some price advancements, we may not yet be witnessing a complete altseason. Since October, several tokens have achieved noteworthy returns, with meme coins leading in performances and DeFi tokens also staged a noteworthy comeback. Meanwhile, Bitcoin has surged to new all-time highs recently, prompting speculation that investor focus may soon pivot towards altcoins. Moreover, the achievements of DeFi and newer tokens could point to increased opportunities for altcoin expansion, especially as market dynamics continue to shift.
Indications of an Altseason Yet to Materialize
Research analyst Nicolai Søndergaard emphasizes that while we have various market indicators at our disposal, they often lag behind actual market changes. Several macroeconomic factors can provide valuable insights into the crypto landscape, but predicting the precise moment an altcoin season might commence remains challenging.
Søndergaard points out that no single indicator can definitively signal the arrival of an altseason. To gauge potential altcoin activity, analysts typically scrutinize macroeconomic indicators and specific market trends. One important area of focus is the monetary policy decisions made by the U.S. Federal Reserve and the Federal Open Market Committee (FOMC). However, he notes that relying solely on previously established meeting outcomes for forecasting altcoin seasons is fraught with uncertainty.
Additionally, the alt season indicator from Blockchaincenter currently suggests that we are not yet in an altcoin season. Despite some coins experiencing positive price movements after a lengthy period, broader trends indicate a different picture. For instance, data from Nansen illustrates that only 12% of altcoins tracked on CoinGecko are presently bullish, using the 30-day moving average compared to the 360-day average.
Other critical indicators include Bitcoin dominance, which shows that a decrease might imply that investors are reallocating their assets into altcoins—a potential signal of an approaching altcoin season. Moreover, the TOTAL3 index, which measures the market capitalization of all cryptocurrencies excluding Bitcoin and Ethereum, serves as a barometer for the altcoin market’s overall strength.
However, both indicators often confirm trends only after they have already started, further complicating the timeline for predicting the start of an altseason. Given these complexities, it appears that the crypto community may have to be patient while awaiting the onset of a true altseason.
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