Altcoin season potentially underway but remains limited by market liquidity challenges – CryptoQuant
Since mid-November, the 90-day moving-average of altcoin volume traded on centralized exchanges is up, possibly signaling an altcoin Season. CryptoQuant.
Ki Young Ju, CEO of CryptoQuant and founder. Shared data showing As of February 20, the ratio of trading volume of altcoins to Bitcoins (BTC) increased from 1.77 up to 2.77.
Ki highlighted that this potentially indicates that “alt season has begun.” Alt season is the period when the prices of altcoins soar compared to BTC.
He added:
“No direct BTC-to-alt rotation, but stablecoin holders are favoring alts. Alt volume is 2.7x BTC. BTC Dominance no longer defines alt season — trading volume does […] BTC isn’t a quote currency anymore.”
Data suggests that centralized exchanges are concentrating their trading on the four biggest altcoins in terms of market capital: Ethereum (ETH), XRP (BNB), and Solana(SOL).
Although the altcoin/BTC volume ratio has increased, the “aggregated trading volume of stablecoins” remains the same, with the exception of a peak in the amount traded on Feb. 3 at $60.4 billion.
Selective altcoins season
In December, Ki warned his followers that this bull cycle’s alt-coin season would be “weird and challenging” because there is insufficient liquidity to propel the entire sector. Only a few altcoins are likely to soar. He said that altcoins ready to reach new local highs will follow two different paths.
The first is creating “paper-wrapped versions” like Bitcoin. He’s referring to the ecosystem built around BTC through traditional investment vehicles, such as exchange-traded funds (ETFs), Strategy’s BTC acquisitions, and funds investing in BTC.
The second way is to create a decentralized system using BTC or stablecoins to make sure that altcoins will appreciate independently. Noteworthy is a recent Kaiko Report highlighted The top 10 altcoins ranked by market capital account for 64% daily altcoin liquidity, despite the fact that this value has nearly doubled from September to February 11.
CryptoSlate data shows that only three of 22 altcoins have shown positive performance year-to date.
The average crypto market performance year-to-date stands at negative 24,9% as of February 21. 13 altcoin segments have losses exceeding this threshold, which is equivalent to 59% in the altcoin marketplace.
