Over the past week, altcoins have experienced significant growth in tandem with Bitcoin [BTC]. This has led to a notable increase in the Altcoin Season Index, reaching a two-month peak of 45 as reported by Blockchain Center.
Nevertheless, to confirm the onset of an altcoin season, this index must rise to 75. While this milestone has not been achieved yet, the index has been steadily climbing, starting the month at 18.
The current data indicates a shift in sentiment towards altcoins towards a more optimistic outlook. However, for the index to exceed 75, altcoins must continue to build on their recent gains.
Altcoin Performance in Comparison to Bitcoin
Despite some recent gains against Bitcoin, Ethereum [ETH], the largest altcoin, has been struggling, with the ETH/BTC ratio dropping to its lowest point since 2021.
While the ratio has managed to rebound to above 0.04, indicating slight gains for ETH against Bitcoin, it remains at levels not seen in over a year.
Among the top ten cryptocurrencies, Solana [SOL] stands out as the only altcoin that has outperformed BTC in the past week, recording a 12% increase.
An analysis of the top 50 cryptocurrencies over the last 90 days reveals that the majority are still in the negative, with standout performers like AAVE [AAVE] and SUI [SUI], which have surged by over 50%.
This suggests that altcoins need to extend their upward trajectory further to usher in a full-fledged altcoin season.
Will the Rise of DeFi and NFT Initiatives Trigger an Altcoin Season?
The burgeoning decentralized finance (DeFi) and non-fungible token (NFT) sectors are critical influencers of altcoin performance. Both industries have shown remarkable growth in recent days.
According to DeFiLlama, the Total Value Locked (TVL) across DeFi protocols has climbed by over $10 billion in just two weeks, reaching $85 billion currently.
Despite this surge, there is still untapped potential, given that DeFi activities are yet to reach the peak levels of over $100 billion witnessed earlier this year.
Simultaneously, the NFT space has experienced a surge, with NFT sales volumes jumping by more than 40% as observed on CryptoSlam.
While these trends hint at the possibility of an impending altcoin season, Bitcoin’s dominance in the market remains significant, standing at 54% according to Coinstats.
The mounting dominance of Bitcoin could be linked to Ethereum’s underperformance, with the latter’s dominance dwindling from 18% in early 2024 to 14% at present.