Some altcoins have recently demonstrated superior strength compared to Bitcoin by reaching new all-time highs. The 2% decrease in BTC's dominance is a signal that suggests a small capital rotation from BTC to altcoins. However, a larger shift may be about to occur.
According to a recent report from analyst Joao Wedson of CryptoQuant, there is strong accumulation in altcoins like Aave (AAVE), Dogecoin (DOGE), Maker (MKR), Chainlink (LINK), and Artificial Superintelligence Alliance (FET),...
The red bars indicate the outflow (accumulation) of tokens, meaning these coins are being transferred from exchanges to users' personal wallets. This shows a positive trend, as users are moving money off the exchange instead of leaving it on the exchange.
Specifically, Binance has recorded significantly more outflow than inflow, reflecting the increasing confidence of investors in the breakout growth potential of altcoins. As investors transfer tokens to personal wallets, they tend to hold long-term rather than trade frequently, further reinforcing expectations of a strong growth spurt in the future.
Is the altcoin season confirmed?
This is a very interesting question as there have been some warnings about the altcoin season in the first half of this year, but none of the warnings were like the impressive market rally in November last year. In fact, some altcoins like Hyperliquid (HYPE) have seen triple-digit growth, while others have experienced significant declines. So is there anything different this time?
The answer may come from Swissblock's data. This cryptocurrency analytics firm has recorded that 15% of the top 100 altcoins are currently showing positive momentum signals, according to their proprietary analysis model. Swissblock stated:
"We are at the early stage of the altcoin recovery cycle. The momentum awakening: 15% of the top 100 altcoins are showing positive momentum—the rotation is beginning."
This is a very notable signal. Swissblock also notes that a similar momentum signal was warned before the altcoin rally last November. Therefore, we may be at the early stage of another strong altcoin season.
Another interesting factor is the change in the dominance ratio of USDT. Since the end of June, this ratio has dropped from 5% to 4.5%, and if tracked from April, the dominance ratio of USDT has decreased a total of 2.5% from 6% to 4.5%. This is the bottom of Q2 and then there was a strong recovery in Q3.
This means that buying pressure is increasing as users sell USDT and switch to their favorite altcoins. The decrease in USDT.D indicates that capital is flowing out of stablecoins and into riskier assets, primarily altcoins.
Another sign is the growth of the ETH/BTC ratio. Over the past week, this ratio has increased by 10%, and in total from the low in June, it has risen by 19%. This indicates that some traders are shifting from BTC to ETH, which is a clear sign that the altcoin season may be approaching.
However, at the time of writing, the ETH/BTC ratio has reached the 200-day moving average (SMA 200, blue line). This is a significant resistance level, and this ratio has been 'capped' at this level for the past two days.
If ETH/BTC can sustainably surpass the 200-day SMA, this will further confirm a strong capital rotation from BTC to altcoins and drive the altcoin market to grow even stronger. Conversely, if this ratio decreases, it may limit the recovery momentum of the altcoin market.