Altseason Speculation Intensifies As Altcoin Market Cap Approaches May 2021 Levels (Bitfinex)

Although the market dynamics signal the start of an altcoin season, Bitfinex believes that any major correction in the price of Bitcoin would be amplified 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 reached levels not seen in three years, signaling the potential start of an altcoin season.

According to the weekly Bitfinex Alpha report, there is significant strength and momentum in the broader altcoin market, as evidenced by many cryptocurrencies reaching cycle highs and large-cap assets like Solana (SOL) reaching a new historic high.

The start of the Altseason

Altcoin season refers to a period when capital leaves BTC and flows into altcoins, causing cryptocurrencies to outperform the leading digital asset over relevant periods. Currently, the market often reflects a growing investor appetite for altcoins and positive market sentiment among traders.

Last week, the Total3 index reached new cyclical highs, achieving its strongest advance since April 2021 with an increase of 23.2%. The total market capitalization of these crypto assets has moved closer to their collective May 2021 high of $984 billion. Bitfinex said the increase was likely due to ongoing developments in the regulatory landscape.

“We passed the April 2022 high for altcoins, which was widely considered the “start of the bear market,” after which the next downward impulse formed the 2022 bear market lows for altcoins. We believe that an ascent beyond these levels indicates the rotation of speculative capital and interest from Bitcoin to altcoins as retail market participation increases,” the report said.

Notably, higher funding rates for large-cap altcoins are prompting investors to exercise caution when trading as these assets could experience minor corrections in the coming days. Bitfinex said the market has already seen daily liquidations of several hundred million dollars over the past week for both short and long positions.

How is Bitcoin doing?

As altcoins prepare for their rally, BTC is struggling to stay 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 last week.

Bitfinex warned that a larger BTC correction could be amplified in altcoins, although the altseason is expected to continue.

Meanwhile, Bitcoin is now the seventh-largest traded asset by market capitalization, and its quarterly performance has surpassed that of gold and silver.