1051 days have passed since the last copycat season

Original title: It's been 1,051 days since the last altcoin season

Original author: Katherine Ross, David Canellis, Blockworks

Original translation: BitpushNews Mary Liu

The cryptocurrency market suggests that the altcoin season is coming. Unfortunately, we are not there yet.

As with most things in this industry, there is almost no formal definition that everyone agrees on.

Does the Bitcoin bear market start when there is a pullback of more than 20% from the local top, like traditional finance? Obviously not.

Is the protocol "decentralized" because it has a governance token? If this is the case, the project party will not find everything "difficult".

Since the beginning of the month, the total cryptocurrency market capitalization has risen by nearly 20%, growing by more than $360 billion to $2.35 trillion. Altcoins account for about 40% of the total market cap, with Bitcoin making up the rest.

So what exactly is altcoin season?

One sometimes cited metric holds that altcoin season begins when three-quarters of the top 50 coins outperform Bitcoin over the past 90 days.

This time around, only 34% of the top 50 coins outperformed Bitcoin. While there was a very brief period at the beginning of the year when these conditions were met, there was no altcoin season.

As loyal Empire readers know, I have a different way of tracking altcoin seasons that extends far beyond the top 50. But even so, we are still far away.

Alt season is likely when the blue line (altcoins) is above the orange line (bitcoin)

My approach is this: alt season is likely to begin when the market cap growth of the entire crypto market (minus the top 10) exceeds that of Bitcoin from the bottom of the cycle.

Alt season is only confirmed if the broader crypto market grows faster than Bitcoin for at least 90 consecutive days.

It’s not a perfect model, but it does hold up during the backtesting period. It’s also generous to altcoins: in many cases, market cap growth simply reflects the rate at which tokens are unlocked and added to circulating supply — not price appreciation.

According to these rules, crypto has experienced three distinct altcoin seasons over the past eight years, as shown in the green shaded area in the chart below.

In the 18 months from July 2016 to January 2018 — Litecoin, Monero, Ethereum Classic, Dash, and the original prediction market token Augur were in the top ten.

In the six and a half months between December 2018 and July 2019, Bitcoin Cash, EOS, Stellar, and Bitcoin SV approached blue chip status

For nearly 18 months, from May 2020 to November 2021, Polkadot and Chainlink topped the list.

The current market cycle began on November 21, 2022, when the total market capitalization of cryptocurrencies fell to $727.58 billion, the lowest point since December 2020, following the FTX crash.

Bitcoin’s market capitalization has grown nearly fourfold from the bottom of the cycle, from $313.4 billion to $1.27 trillion ($15,500 to $64,400).

Meanwhile, altcoins have grown less than 2.8x over the same period, meaning we are still a full order of magnitude away from an altcoin season.

The gap widened dramatically from April to the beginning of this month, when altcoin season was furthest along in the entire cycle. The gap was smallest when Bitcoin peaked in March.

All of this means that whatever gains altcoins are seeing right now are really just strong rallies. Altcoin prices have corrected sharply after Bitcoin’s recent all-time highs, and are only now roughly back to where they were in late July.

Bears will say that altcoin season won’t arrive until the bull run is over.

However, given how far altcoins still have to go, bulls may argue that we are on the verge of the strongest altcoin season ever.

Data

BTC has risen 1% in the past day and is expected to break through the $64,500 mark again, while the price has rebounded at least three times in the past seven days.

ETH is flat after reaching resistance at $2,640.

Only two top 100 tokens are down over the past week: KAS is down 6% and XMR is down 5%.

Ethereum fell into deflation again overnight, but it didn’t last.

Base TVL hits a new record above $2 billion for the first time, adding over $600 million in the past 18 days.

Take a deep breath

Volatility has been OK this week, but it may not last long.

Look, there’s $5.8 billion in options expiring tomorrow, one of the largest expirations so far this year.

20% of Bitcoin options are in-the-money, meaning larger expiration dates “could increase market volatility or activity as traders close or roll over positions, which could also impact price,” said Deribit CEO Luke Strijers.

Strijers continued: “Overall, the options market (parties) have performed well this year, with volumes growing month-over-month. Despite a lot of new competition, our market share has not dropped significantly, which is a healthy sign as the market is growing – exchanges are not competing for the same customers, we are collectively growing market share and attracting new customers.”

With this on the horizon, let’s look at the bigger picture and the broader market as David gives us a great snapshot of altcoins. A K33 report from earlier this week showed CME traders “cautiously optimistic.”

Analysts wrote: "After the FOMC announced the rate cut, CME's BTC and ETH premiums rose to 9%. After the FOMC announced the rate cut, CME's open interest peaked at 161,040 BTC last Thursday, with active market participants significantly increasing their exposure by 6,500 BTC. Since then, open interest has fallen back to 152,000 BTC."

But perpetual contract traders are not so optimistic, and some bearish sentiment remains, which may "lay the foundation for a massive short squeeze."

Source: Deribit

Analysts Vetle Lunde and David Zimmerman said: "Perpetual options traders have turned conservative since the first FOMC-related rally, with the perpetual options discount widening amid stable price action. This coincides with an increase in open interest, which remains around yearly highs."

For those watching the Fear Greed Index, it is currently neutral after showing some fear last week.

The macro influences won't go away anytime soon, with K33 noting: "We also expect economic indicators to continue to influence Bitcoin price action. Next week will see the release of important monthly US labor market statistics, while the Eastern Hemisphere will usher in the bank holiday season, which may increase the focus on US data."

We are getting closer to the November election and the fourth quarter, which remains a potentially positive period for cryptocurrencies.

For bulls, it's almost time to act.

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