Although market dynamics signal the onset of an altcoin season, Bitfinex believes any major correction in bitcoin’s price would be magnified in these assets.
Over the past three weeks, the Total3 Index, which refers to the market capitalization of cryptocurrencies excluding bitcoin (BTC) and ether (ETH), has rallied to levels not seen in three years, signaling the potential onset of an altcoin season.
According to the weekly Bitfinex Alpha report, there is significant strength and momentum in the broader altcoin market, as seen in many cryptocurrencies reaching cycle highs and large-cap assets like Solana (SOL) hitting a new all-time high.
The Onset of Altseason
Altcoin season refers to a period when capital leaves BTC and flows into altcoins, causing the cryptocurrencies to outperform the leading digital asset on relevant timeframes. At this time, the market often reflects an increasing investor appetite for altcoins and a positive market sentiment among traders.
Last week, the Total3 Index reached new cycle highs, achieving its largest trough-to-peak move since April 2021 with a 23.2% surge. The total market cap of these crypto assets rallied close to their collective May 2021 high of $984 billion. Bitfinex said this surge is likely driven by ongoing developments in the regulatory landscape.
“We have moved past the April 2022 high for altcoins, which was widely regarded as the “start of the bear marketˮ, after which the next impulse down formed the 2022 bear market lows for altcoins. We believe an ascent past these levels indicates the rotation of speculative capital and interest from Bitcoin into altcoins as retail market participation increases,” the report stated.
Notably, the higher funding rates for large-cap altcoins are a sign for investors to exercise caution while trading because these assets could experience minor corrections in the coming days. Bitfinex said the market has already experienced daily liquidations running into hundreds of millions of dollars over the past week for short and long positions.
How is Bitcoin Faring?
While altcoins are gearing up for their rally, BTC is struggling to remain above $93,000 as investors take profits. The cryptocurrency was worth $93,550 at the time of writing, down 3.5% daily after flirting with $100,000 over the past week.
Bitfinex warned that a larger BTC correction could be magnified in altcoins, even though the altseason is expected to continue.
Meanwhile, Bitcoin is now the seventh-largest traded asset by market cap, and its quarter-to-date performance has surpassed that of gold and silver.
The post Altseason Speculations Heat up as Altcoins Market Cap Near May 2021 Levels (Bitfinex) appeared first on CryptoPotato.
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