The much-anticipated altcoin season might finally be upon us as analysts point to Ethereum’s robust performance and the growing momentum in the sector.
Ethereum is being seen as a key indicator of the market’s overall health, with its positive trajectory further fueling expectations of an upcoming altcoin surge.
Jake Ostrovskis, a trader specializing in options and OTC markets at Wintermute, observed a significant surge in positive sentiment towards ETH, leading to a shift in capital towards alternative coins.
Market indicators suggest a potential shift in sentiment. Increased volatility, elevated skew levels, and strong demand for certain options contracts signal a bullish outlook.
The spike in implied volatility reflects a growing confidence among options traders in Ethereum’s future prospects, which could, in turn, boost the wider altcoin market.
Current State of the Altcoin Season
On YouTube, Nicholas Merten of DataDash echoed similar views, highlighting the decline in Bitcoin dominance as a precursor to a possible altcoin rally.
Merten pointed out that the Altcoin Index, excluding the top 10 tokens, had surpassed key resistance levels and was trading above its 200-day moving average, signaling a positive momentum shift and raising hopes for further growth.
Despite these recent developments, the Blockchain Center’s Altcoin Season Index indicates that a full-fledged alt season has not yet materialized.
The index currently hovers around the 50% mark, suggesting that only half of the top 50 tokens have managed to outperform Bitcoin in the last three months, including coins like Stellar and Dogecoin.
Typically, an altcoin season is confirmed when more than 75% of the top tokens outperform Bitcoin.
Similar spikes in altcoin momentum were witnessed in July and September, but they waned as Bitcoin’s dominance strengthened. The question now is whether the current trend will be more sustainable.
November 25th saw significant rallies in Ethereum, Layer 2 solutions, GameFi, and DeFi sectors while Bitcoin experienced a dip below $95,000.
However, the founders of Glassnode advised caution, stating that a full-fledged altcoin rally would only materialize if Bitcoin surpassed $100,000 and relinquished market dominance.
“For a proper Altcoin season, we require a significant decrease in Bitcoin dominance. Our focus is on the $100K mark—potentially preceded by market corrections.”
Looking at the ETH/BTC ratio, there is a cautiously optimistic outlook. An increase in this ratio signifies Ethereum outperforming Bitcoin, which is typically positive for the altcoin market.
However, Ostrovskis of Wintermute cautioned that the strength of the ETH/BTC trend is still uncertain for a sustained altcoin surge, at least for now.
“To see a full-fledged altcoin season, Ethereum’s performance against Bitcoin needs to show consistency over several sessions. The ongoing fluctuation makes this aspect crucial as we head towards the end of the year.”