While the week may have gotten off to a rough start in altcoin markets, things seem to have taken a turn for the better. Over the past 24 hours, the total market cap of all altcoins has risen from $933 billion to $1.01 trillion, recovering some of the losses that took place earlier this week.
As such, it seems as though the correction may have just been another bump in the road or another minor correction on the path toward altseason glory. But, has alt season really begun?
What Makes an Altcoin Season, Really?
It seems that the answer could be yes or no, depending on who you ask. Some traders seem to think that altseason has been underway for weeks (or even months); others believe that altseason is still some time away.
CoinTelegraph reported that Ben Lilly, crypto economist & partner at Jarvis Labs, believes that a real altcoin season is miles away.
Why? According to Lilly, the term ‘altcoin season’ has many different definitions. For him, a true altcoin season is characteristically marked by “market movements that take people by surprise or at least make traders rethink what is normal.”
In other words, the altcoin season really starts when the expected range of support and resistance levels are broken by fast price action: “the type of action you want exposure to, assuming you’re on the correct side of it,” Lilly explained.
In order to determine exactly where this expected range of support and resistance levels lies, Lilly says that it is important to look at Bitcoin dominance. According to him, BTC dominance has been steadily trending downward, trading in a ‘range of expectation’ since late 2019, with the exception of BTC’s massive price rally at the end of 2020.
When that happened, Lilly said, “Bitcoin went on an absolute tear.” Therefore, in order for altseason to truly begin, the opposite would have to happen: “[if] we break this expected range to the downside, in our point of view, this will signify that altcoins are the asset to be sitting in, as they will generate outsized returns relative to Bitcoin. That’s when things will get wild.”
Crypto Markets May Not Be in an Alt-Season, but They Likely Are in an Altcoin Bull market
While crypto markets may not truly be in an alt-season yet, Lilly says that they are experiencing a bull run. This occurs when “investors are more likely to walk further out on the risk curve of crypto versus simply buying Bitcoin, not necessarily outsized gains compared with Bitcoin.”
Therefore, an altcoin bull market could be defined as “whenever Bitcoin dominance is falling while crypto as a whole is in a bull market.”
And, indeed, this is exactly what is happening today. The crypto market cap excluding Bitcoin is up 8 percent over the last 24 hours. However, when you add Bitcoin back into the mix, the total crypto market cap is only up 5 percent. At the same time, Bitcoin’s dominance has been steadily declining since the start of the year. At press time, BTC dominance was at 51 percent.
Institutional Cash Is Flowing into Crypto Assets
Additionally, there is evidence that money may be flowing into altcoins from new sources. For example, CoinTelegraph reported that: “institutional investors have rallied around XRP this past week,” evidenced by a nearly 100-percent increase in XRP investment product AUM.
Specifically, Coinshares’ weekly digital asset fund flows report showed that $33 million had been placed into XRP investment products just this week, increasing the total XRP-based AUM to $83 million.
The report, which was published on April 19th, also said that last week marked the most bullish week for institutional crypto investment products in over a month. $65 million went into Ether (ETH) products; Tezos (XTZ) saw $7 million come in.
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