Key Points
- Altcoin season may begin in November, offering strong investment opportunities.
- Bitcoin’s high market dominance could lead to profit-taking into altcoins, potentially sparking an altcoin season.
Altcoin Season on the Horizon?
The upcoming November could mark the beginning of an altcoin season, presenting lucrative investment opportunities. Despite this, altcoins as an asset class continue to decline.
Bitcoin’s Dominance and Potential Altcoin Surge
With the US election results looming and expected changes in monetary policy, Bitcoin (BTC) is following a volatile path. This has attracted traders to its relative stability, pushing BTC near its record high of $73K and increasing its market dominance to over 60%. This high dominance might pave the way for a surge in altcoin investments if profit-taking from Bitcoin occurs.
Historically, altcoins have seen substantial rallies in periods leading up to Bitcoin’s all-time highs, as retail investors diversify their portfolios. However, the current situation seems different. According to a recent report, short liquidation spikes have significantly impacted Bitcoin’s recent price increases. This could lead to investor caution due to the derivative market’s volatility.
If this trend continues, investors might shift their capital to other high-cap tokens, potentially triggering an altcoin season. With all Bitcoin cohorts currently in profit, there’s a high chance that altcoins could surge by mid-November. This could coincide with the end of the election cycle, prompting investors to adjust their strategies according to new market trends.
Caveats to the Altcoin Season
Despite the current optimism, with Ethereum (ETH) showing a significant weekly surge, altcoins as a whole are still struggling. Although a few tokens may experience breakouts, the overall trend is clear: altcoins continue to decline as an asset class.
As the total market cap has increased from $2T to $2.4T, nearly all new money has been funneled into Bitcoin, drawing liquidity away from altcoins. This is evident in Bitcoin’s rising dominance. Currently, only 14 altcoins have managed to attract liquidity in the past 90 days. They have also been in a severe downtrend against Bitcoin since early 2022.
The liquidity dynamics in the crypto market have changed significantly. Although a few altcoins might be set for gains during the post-election cycle, the narrative surrounding an altcoin season remains elusive. This trend suggests that high Bitcoin dominance may no longer serve as a reliable precursor for an altcoin season.
