Author: BitpushNews
Recently, Bitcoin (BTC) has repeatedly hit new all-time highs, briefly breaking through $123,000 per coin. Against the backdrop of Bitcoin's strong upward trend, significant capital rotation is emerging within the crypto market, with a group of previously dormant veteran Altcoins gradually becoming active, with gains even surpassing Bitcoin's recent performance.
CMC market data shows that among the top 20 crypto assets, some "veteran" Layer 1 Altcoins have performed outstandingly, with 7-day gains generally reaching double digits. The leader is Stellar (XLM): ranked 12th in market cap, with a weekly gain of 82%, leading its peer assets. ADA, ranked 10th, saw a 7-day gain of nearly 30%; XRP 29%; Doge 18%.
Some relatively new Altcoins, such as the Layer 1 project Sei (SEI) focused on decentralized exchanges (DEX) and the synthetic dollar protocol Ethena (ENA), have also seen impressive gains, with 7-day increases exceeding 30%.
A recent research report by Delphi Digital pointed out that these long-established tokens that have experienced multiple bull and bear cycles have even outperformed the then-popular AI and DePIN (Decentralized Physical Infrastructure Network) concept tokens since January this year.
Analysts suggest that the collective strength of veteran Altcoins is interpreted as an early signal of retail funds potentially flowing back. These tokens represent cryptocurrencies that have existed longer in the crypto market with larger market caps, and their activity often reflects retail market participation and fund preferences, while traders also maintain attention on emerging projects with innovative narratives and high growth potential.
Altcoins' "BANANA ZONE 2.0"
Market observer @MerlijnTrader monitored the TOTAL3 chart, which tracks the total market cap of cryptocurrencies excluding Bitcoin (BTC) and Ethereum (ETH), effectively reflecting the overall momentum of Altcoins. He noted that the TOTAL3 chart is entering the "Banana Zone 2.0", which typically means the market will experience an explosive breakthrough after a period of consolidation.
The trader believes that compared to the Altcoin wave of 2020, the upcoming trend will be "bigger, faster, and supported by real-world use cases and substantial funding". This suggests that the Altcoin market may no longer be merely speculative frenzy, but driven by fundamentals and institutional funds for more sustainable growth.
Signals of "Altcoin Season"
According to the CMC Altcoin Season Index, when 75% of the top 100 Altcoins (excluding stablecoins and wrapped tokens) outperform Bitcoin in the past 90 days, it officially enters "Altcoin Season". This threshold reflects the broad market rotation of funds from Bitcoin's dominance to diversified Altcoin growth.
Currently, the Altcoin Season Index is 32/100, far from the 75-point threshold, indicating the market is still in a Bitcoin-dominated phase. However, the index has shown a positive upward trend recently (rising from 26 points last week to 32 points today), hinting at early rotation signals.
Key signals of Altcoin Season include:
- Increased Altcoin dominance: In past Altcoin seasons (like May 2021), the total market cap of the top 100 Altcoins once exceeded 130% of Bitcoin's total market cap. This expansion marks increased capital inflow into Altcoins.
- Rapid price increases: Altcoins often experience dramatic price surges in short periods. In early 2021, the average return of major Altcoins reached 174%, far exceeding Bitcoin's modest 2% growth.
- FOMO sentiment and retail frenzy: Altcoin Season is typically accompanied by high 24-hour trading volumes and strong bullish sentiment. Market optimism increases buying pressure, further driving prices up and attracting new participants.
A key current market characteristic is the decline in Bitcoin dominance. Crypto analyst Satori observed that historically, when Bitcoin's price remains stable or moderately increases while its share in total crypto market cap decreases, this is usually seen as a sign of capital rotation from Bitcoin to Altcoins, potentially signaling the arrival of "Altcoin Season".
Satori noted that this pattern was evident in historical cycles like 2017 and 2021. Currently, Altcoins have begun to perform generally, with steady volume increases, suggesting institutional and retail investors may be diversifying their funds into alternative digital assets, driven by multiple catalysts:
- Spot ETF launch: US spot Bitcoin and Ethereum ETFs provide compliant entry channels for institutional funds, unlocking substantial institutional liquidity. As these funds flow into Bitcoin and Ethereum, some may overflow into Altcoins with higher growth potential.
- Layer 2 solution advancements: L2 technology development enhances scalability and efficiency of Layer 1 platforms like Ethereum, reducing transaction costs and supporting more application scenarios, benefiting Altcoins in its ecosystem.
- Convergence of AI and blockchain, development of Real World Asset (RWA) tokenization, and improvements in blockchain gaming infrastructure all bring new value narratives and application prospects for Altcoins, providing fundamental support.
Therefore, while it remains to be seen how long this "mini Altcoin Season" can last, the positive market signals indicate that investors are re-embracing risk, injecting long-awaited vitality into the market.
