Bitcoin (BTC) experienced a sharp correction on Feb. 20, sinking as much as 4% from an intra-day high of $53,019 to a low of $50,812, threatening to wipe out the gains of the past seven days.
This pull-back led traders to re-evaluate the general condition of the crypto market, initiating a debate on whether the altcoin season (altseason) is here.
What’s behind the Bitcoin price pull-back?
Traders and market analysts believe the ongoing price crash is a part of the 5 phases of the Bitcoin halving cycle and that BTC might be experiencing a pre-halving retrace before entering a widely expected post-halving parabolic uptrend.
Crypto trader and analyst Rekt Capital shared the following chart in a Feb. 15 post on X saying that Bitcoin has “one last Pre-Halving Retrace left” before resuming the uptrend.
#BTC
— Rekt Capital (@rektcapital) February 15, 2024
There is only one last Pre-Halving Retrace left (dark blue circle)$BTC #Crypto #Bitcoin pic.twitter.com/Q6qF1ieEEL
Independent market analyst Sjuul noted funding rates were high for BTC warning traders to “expect some correction across the board.”
“In my opinion, it's the buy-the-dip opportunity we are all looking for.”
Market intelligence firm Santiment pointed out significant moves in “mid-tier traders often work as excellent signals for” profit taking and “dip buys.”
“In the past 2 weeks, #stablecoin holders with $10K to $100K: Added $44.3M in $USDT.”
This is an indication that they could be getting ready to buy the dip in case of a pullback.
Bitcoin versus altcoins
Altcoins have displayed great performance over the last 12 months, posting double and triple-digit gains, with some outperforming Bitcoin. Some of them have demonstrated better performance on shorter timeframes.
According to data from CoinMarketCap, Bitcoin has rallied 107% over the last 12 months, Solana (SOL) has gained 308%, Avalanche’s AVAX 80%, and Chainlink's (LINK) 136%.
The latest data from on-chain analytics firm Glassnode shows that while “BTC and ETH are leading the pack, with year-to-dat gains of 17.6% and 18.2%, respectively,” Bitcoin’s year-to-date performance surpasses aggregate altcoin market cap.
Glassnode analyst Alice Kohn said, "the aggregate Altcoin market cap has not experienced the same performance, with YTD growth being less than half of the two majors.”
Glassnode notes that although Ether (ETH) began to outperform BTC following the approval of the spot Bitcoin ETFs in January, its performance fell below Bitcoin’s on Feb. 8.
According to Glassnode, the performance of digital assets can also be tracked by using Realized Cap for each sector, a metric that “aggregates the cost basis value of all coins transferred on-chain.”
Glassnode notes that Bitcoin continues to display dominance seeing approximately “$20B in capital inflows per month at present.” As the chart below highlights, Bitcoin’s dominance has continued to grow with a 1000% surge in relative market cap since October 2023.
“It is evident that capital moves down the risk curve into Altcoins at a slower pace compared to the rotation between the two major cryptocurrencies, a trend which appears to be in play once again,” notes the report. “Bitcoin continues to lead with over 52% market share of the total digital asset market cap.”
Related: Bitcoin holdings on Coinbase reach lowest level since 2015 as whales withdraw $1B BTC
How close is altseason?
On Feb. 18, independent analyst Stockmoney Lizards told his followers on the X social media platform that he believes “many #Altcoins are about to skyrocket in the next #Altseason.”
The analyst shared a chart showing that the altcoin market cap had scaled above a significant support area and entered into a bull run similar to the 10x returns experienced in 2021.
“We are close.”
Many #Altcoins are about to skyrocket in next #Altseason. We are close. pic.twitter.com/1uvRQdWqzU
— Stockmoney Lizards (@StockmoneyL) February 18, 2024
Even though some signs are there, it may still be too early to confirm the altcoin season. Glassnode’s altseason indicator has shown positive momentum since October last year and turned positive on Feb. 4 after taking a pause during the sell-the-news event triggered by the Bitcoin ETFs approval in January.
Interestingly, the indicator has remained positive since then, an indication that the market is now in a risk-on mode, showing the confidence that the investors have in the altcoins right now.
Data from Blockchain Center shows that only 59% of the top 50 altcoins have outperformed BTC during the last 90-day period. Although this index has been increasing over the last few days, it is still not enough to declare an altcoin season. For an altseason to be declared, this percentage has to move above 75%.
Glassnode concludes, “our Altcoin Indicator suggests a more mature and possibly sustained uptick in Altcoin markets, however, it remains relatively concentrated in higher market cap assets at this time.”
This means that signs of an altcoin season as starting to merge, but it might be too early to make the call.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.