The altseason, or altcoin season, may be closer than expected. This is reflected in the market behavior, which is starting to pay more attention to alternative cryptocurrencies to Bitcoin (BTC).
Currently, 50% of the top 50 cryptocurrencies are showing better performance than Bitcoin, according to the index developed by Blockchain Center. Although this figure does not reach the technical threshold of 75% that marks the official start of an altseason under this criterion, it represents significant progress that reflects increasing signals within the market.
The concept of altseason does not have a unique definition. In this case, it is considered to start when three out of four altcoins, within the top 50 by market capitalization (excluding stablecoins and wrapped versions of BTC and Ether), outperform Bitcoin over the last 90 days. The index that measures this behavior has been used by multiple analysts as a key reference to anticipate the start of a bullish cycle focused on cryptocurrencies other than Bitcoin.
In general, cryptocurrency market cycles are usually divided into four phases. The first is dominated by a strong influx of capital into Bitcoin, whose price reaches all-time highs. This has already occurred, with BTC surpassing the threshold of USD 120,000.
In the second phase, once BTC stabilizes, investors shift part of their capital to ETH, the cryptocurrency of the Ethereum network, in search of additional returns. This tends to reduce Bitcoin's dominance against the rest of the market.
In the third phase, Ethereum begins to gain momentum and capital flows into large-cap altcoins. It is at this moment that enthusiasm increases around more diversified projects within the ecosystem.
Finally, the fourth phase is marked by a speculative wave: investors turn towards coins with less solid fundamentals, in an environment of high euphoria. Although this stage can generate accelerated gains, it also implies high volatility and risk of losses.
At this moment, the market is in the second phase of the cycle. This is the case as ETH is in a stellar moment, surpassing USD 3,000 for the first time since the beginning of this year and 25% from its all-time high of USD 4,890, reached in November 2021. Furthermore, this cryptocurrency has gained traction among institutional investors, who have started to massively shift towards this asset through exchange-traded funds (ETFs) traded in the United States.
