Will $1T Market Cap Spark a new Alt Season?

05 Feb, 2021
Will $1T Market Cap Spark a new Alt Season?

And then, there are the altcoins.  Those thousands of cleverly built and innovative digital currencies that are playing second fiddle to the stars of the crypto show:  Bitcoin (BTC) and Ethereum (ETH). While traders are bragging about their tremendous gains as BTC and #2 ETH continue to climb to new heights, altcoin enthusiasts are knowingly nodding their heads. Just wait, you can almost hear them say.  Just wait for Alt Season to begin.

But when? Will the crypto market capitalization of more than $1.1 trillion – an all-time high – spark a new robust “Alt Season” as more investors rush into digital currencies?

“Alt Season,” short for Alternative Coin Season, is loosely defined as a window in the crypto market when, as the price of BTC declines, along with its market dominance, investors look for alternatives and boom!  -  altcoins begin a run up of their own.  With 6,228 alt coins in the market, according to Coin Gecko, you can see why a “season” can be a significant driver that can help bolster market capitalization.

“Alt Season” is the part of the overarching cryptocurrency market cycle where many altcoins “moon” (go up quickly in price) against the dollar and Bitcoin at once (for example, late December 2017 – early January 2018)” according to cryptocurrencyfacts.com. During that infamous alt season, as BTC fell dramatically, alt coins dominated the crypto landscape.  In December 2017 alone, BTC’s market dominance dropped below 40% and investors begin moving assets into altcoins which saw a surge in price and market capitalization.

“When BTC dominance declines rapidly, it leads to an increase of investments in the altcoins and may lead to an Alt Season,” summarizes Nicolas Matusiak, Trading Analyst at 4C.

To make the most of Alt Season, traders watch for other signs and signals as well. “Relative trade volume, social media activity, new coin listings and the number of news articles published from crypto projects appear to have an impact on whether altcoins are about to have their time in the sun,” writes Sam Bourgi in Cointelegraph.

But before you think that all altcoins need a “season” to accrue great gains, think about this: many coins are already seeing a significant increase in value, riding along on the BTC bull wave.  ETH saw its price skyrocket from $128 in the beginning of 2020 to a new all-time high of over $1700 this week, according to trading view. Chainlink (LINK), Aave Protocol (AAVE), SushiSwap (SUSHI), Dogecoin (DOGE) and other alt coins are experiencing double digit gains and impressive market capitalization as well.

For many coins, BTC’s market dominance has remained a giant wall that only a few are able to scale. In fact, some in the crypto world are predicting a decline in altcoin interest, even in the face of the tremendous amount of capital currently in the market.

Whether Alt Season has started or not remains to be seen.  Could it be that a “season” is a thing of the past?  Or that this is an “Alt Spring” as some suggest?  With more than $1.15 trillion now in the crypto market, it may just be that there is enough interest in crypto as a viable investment tool for strong altcoins to neither wait nor wane in the shadow of BTC.

Or, perhaps the arrival of institutional investors into the crypto landscape is now the driving force that is reshaping the future of altcoins.

“With new capital flowing into BTC and ETH, some of that money may start flowing into altcoins. While that largely held true in the retail driven 2017 rally, this current run is a little different: signs point to it being driven by institutional investors, rather than retail,” Nate Maddery observes in recent CoinMetrics State of the Network report.

“Cryptocurrencies that offer real world use cases that meet the sector’s demands and the ability to govern project decisions have emerged as the most desirable features for today’s retail investor,” summarizes Jordan Finneseth in Cointelegraph.

If so, Alt Season could become “All Season” for the savvy crypto investor.

Joyce Pavia Hanson