Altseason Speculations Heat up as Altcoins Market Cap Near May 2021 Levels (Bitfinex)

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As a seasoned crypto investor with over five years of experience under my belt, I’ve seen my fair share of market cycles and trends. The recent surge in the Total3 Index and the rally of large-cap altcoins like Solana has me intrigued. It seems we might be on the brink of an altcoin season, a period where the smaller coins outperform Bitcoin, which is indeed exciting.

Despite indications that an altcoin boom might be imminent, Bitfinex cautions that a significant drop in Bitcoin‘s value could intensify in related cryptocurrencies.

For the last three weeks, the Total3 Index, representing the market value of all cryptocurrencies except Bitcoin (BTC) and Ethereum (ETH), has surged to heights not reached in nearly three years. This surge could be a hint of an upcoming “altcoin boom”.

Based on the latest Bitfinex Alpha report, it appears that the overall altcoin market is experiencing a robust surge and momentum. Numerous cryptocurrencies have touched their highest points in their cycles, while heavyweight coins such as Solana (SOL) have set new record-breaking highs.

The Onset of Altseason

During an “Altcoin boom,” money moves away from Bitcoin (BTC) and into other cryptocurrencies, known as altcoins. This shift can cause altcoins to exceed the performance of Bitcoin on specific time periods. The market during this period typically shows growing interest in altcoins among investors and a favorable outlook among traders.

Over the past week, the Total3 Index hit record highs for this cycle, marking its most significant increase since April 2021 with a 23.2% spike. The combined market capitalization of these cryptocurrencies approached their peak value from May 2021, which was $984 billion. Bitfinex attributes this growth to continuous advancements in the regulatory environment.

The report indicated that we have surpassed the peak in altcoins reached in April 2022, which was seen as the beginning of a bear market, followed by the formation of the 2022 lows for altcoins during the subsequent downturn. The report suggests that exceeding these previous levels signals a shift of speculative capital and growing interest from Bitcoin towards altcoins, as retail market involvement rises.

It’s important to note that increased funding rates for large-cap altcoins might indicate potential risks when trading, as these assets could see small price adjustments in the near future. Bitfinex mentioned that the market has recently witnessed significant liquidations amounting to hundreds of millions of dollars for both short and long positions over the past week.

How is Bitcoin Faring?

As altcoins prepare for an upward trend, Bitcoin is finding it challenging to stay above $93,000 due to investors cashing out. At the time of this writing, Bitcoin was valued at $93,550, representing a 3.5% decrease in a day, having briefly approached $100,000 within the last week.

Bitfinex cautioned that a significant Bitcoin price drop might have a more pronounced effect on altcoins, despite the ongoing expectation for an extended altcoin season.

Currently, Bitcoin ranks as the seventh most valued traded asset based on market capitalization, outperforming both gold and silver in terms of its growth over the past quarter.

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2024-11-27 00:14