Altcoin Season Index Drops 35% as Altcoins Outperform Bitcoin

The cryptocurrency market is currently experiencing a notable shift, with the Altcoin Season Index dropping to 35. This decline suggests that altcoins are gaining traction, as 27 altcoins have outperformed Bitcoin over the past 90 days. The Bitcoin Dominance Index (BTC.D) has also decreased from 66% to 64.5%, indicating that capital is rotating into altcoins.

Ethereum, the second-largest cryptocurrency by market valuation, has rallied over 17% in the past week, pushing the ETH/BTC ratio up by over 8%. This surge in Ethereum's performance has contributed to the momentum of the altcoin season. Some analysts believe that the market is on the cusp of the "final easy and biggest bull ever on Altcoins." However, they also note that trading altcoins can be challenging due to their volatility, but the potential returns are enormous.

Another key trend underpinning this phenomenon is the high amount of exchange-held stablecoins, often referred to as "dry powder." Stablecoin reserves on Binance have surpassed $31 billion, indicating that traders are ready to deploy fresh capital into altcoins. This trend suggests that while investors are moving their Bitcoin off exchanges into private wallets, they are also keeping large amounts of stablecoins ready to be used when the right market opportunity appears.

The decline in Bitcoin's dominance and the surge in altcoins have led some analysts to speculate that the altcoin season has started. However, some analysts caution that the strength of the altcoin season is contingent on the depth of the BTC.D decline from the EMA50 and EMA200 levels. Despite the bullish momentum in altcoins, some analysts maintain that the altcoin season is yet to come. They point out that the usual signal for an altseason, a drop in Bitcoin dominance, is absent. However, the current divergence of altcoins from the BTC dominance co signal a fresh liquidity injection into crypto market, potentially setting the stage for an altseason.