Despite some assets reaching all-time highs, including Solana [SOL] and Hyperliquid [HYPE], the performance of altcoins has been disappointing recently.
As of the time of writing, the CoinMarketCap altcoin season index is at 29/100, indicating that these assets currently attract limited liquidity, with Bitcoin [BTC] benefiting the most.
However, AMBCrypto's analysis reveals some more interesting things: the factors behind a potential altseason, the current market phase, and historical comparisons.
Here are the reasons leading to the delay of the altcoin trading season.
According to data from Alphractal, combining the altcoin season index (blue line) and Bitcoin price (yellow line) over a weekly timeframe can provide insights into why altcoins have not recorded significant increases.
An important finding is that when Bitcoin shows signs of weakness after a significant rise, the altcoin season often begins—when its price starts to fluctuate.
Similarly, altcoin seasons tend to occur when Bitcoin experiences a significant drop or reaches historical lows.
However, the impact of the first situation is often greater, with about 80% of altcoins surging. In the second situation, the gains of altcoins are usually small, or the value lost during a decline is not as significant as that of Bitcoin.
Now is the time to accumulate altcoins.
The market is currently in a more defined accumulation zone.
According to the above chart, whenever the Altseason line falls into the green box (referred to as Bitcoin season), altcoins tend to show significant movements within three months.
At this market stage, altcoins tend to be highly volatile and usually rise or fall significantly based on Bitcoin's movements.
Historically, rebounds have started in June since the altcoin season of 2022, suggesting that another round of rebounds may occur this year as well.
Importantly, some altcoins have already started this upward trend, with 23% performing better than Bitcoin over the past three months.
However, the upcoming altcoin season is likely to have modest gains. Since 2019, the altcoin market has only seen one instance of excess returns in 2021.
In addition, the trends in the altcoin market are relatively subdued.
If this pattern repeats, then the next altcoin season may not see a significant rebound either.
Unless liquidity shifts again, the altcoin market may remain sluggish.
The liquidity flowing into the ecosystem may support a potential rebound. In the first quarter of this year, a total of $3.8 billion entered the sector.
Although capital inflows slowed in the second quarter, it is still the highest level since mid-2022.
It is noteworthy that during the peak capital inflow period in 2019, the market experienced a significant altcoin season rebound. A similar situation may occur again.
Although the market is generally still in a wait-and-see mode, recent convergences suggest that various conditions are preparing for the arrival of the altcoin season.
