Understanding the Reasons for the Postponed Altcoin Season

Key Points

• Bitcoin’s dominance remains strong despite market volatility, with a current reading of 61.6%.
• Investors are shifting towards mid or low-cap altcoins, delaying the typical altcoin season.

Bitcoin dominance, represented as BTC.D, is an essential metric to determine altcoin seasons. When BTC.D decreases, it generally means investors are redirecting their investments towards altcoins during volatile market periods.

Despite macroeconomic concerns such as the impending FOMC meeting and Trump’s reciprocal tariffs set for April 2nd, Bitcoin’s dominance continues to hold strong. At this moment, it is at 61.6%, slightly below its February peak of 64.3%.

Shift Towards Mid or Low-Cap Altcoins

A detailed examination of the weekly top gainers shows that four out of the five are either mid or low-cap altcoins. This trend indicates that investors are moving away from large-cap coins and leaning towards cheaper, higher-risk alternatives.

Historically, Bitcoin dominance has been a crucial indicator for altcoin seasons. When BTC.D increases, it generally means that investors are moving their funds into Bitcoin for security. However, the current scenario feels different. Notably, the risk associated with Bitcoin is higher than usual.

Bitcoin’s Resilience and Altcoin Overload

The first quarter did not end as anticipated, with Bitcoin still below $100k, leaving many disappointed. Furthermore, no rate cuts are expected until at least the end of Q2, leaving the market in a state of anticipation. Despite these conditions, the altcoin season is yet to arrive.

Even with Bitcoin’s stability, the altcoin season index is currently at 29, indicating that 58% of altcoins are outperforming BTC. This percentage includes mainly low-to-mid cap coins. However, this is still significantly below the 75% threshold generally required to initiate a true altcoin season.

One of the critical factors influencing this cycle is the emergence of Bitcoin ETFs. Just before Bitcoin reached its all-time high of $109k in January, Bitcoin ETFs witnessed $1.078 billion in inflows. Since then, millions have been invested in these ETFs, keeping capital invested in BTC and delaying the usual altcoin season.

End of the Altcoin Season?

As of March 18, CoinMarketCap listed over 12.88 million digital assets, a significant increase from 11 million in February. This surge, primarily from memecoins and low-cap tokens, is diluting investor focus.

While Bitcoin’s dominance continues to delay the altcoin season, investors are turning to high-risk alternatives. Numerous tokens now have market caps between $10,000 and $100,000, tying up capital in short-term assets. This situation is putting pressure on top high-cap coins. For example, the ETH/BTC pair, once robust, has now dropped to a five-year low.

With the introduction of new tokens and the rise of ETFs, the market is undergoing significant changes. The typical capital flow from Bitcoin to altcoins seems to be fading, leaving Bitcoin with a firm grasp on the market.