The altcoin season index has crashed from the crucial support levels flashing warning signs of an end coming to the massive rally. The broader crypto market entered a steep correction with Bitcoin price dropping under $105K and top altcoins including Ethereum (ETH), XRP, Cardano (ADA), Dogecoin (DOGE), seeing even greater fall. Some analysts have also started flagging caution signs for trading in altcoins.
The altcoin season index, which measures the performance of the top 100 cryptocurrencies by market cap, dropped another 4 points earlier today. As per the data from Blockchain Center, the index dropped from 65 to 61 today amid the broader crypto market crash.
Note that a score above 50 is typically an altcoin season while that above 75 suggests a strong season. For the market to enter this season, at least 75% of altcoins must outperform Bitcoin. The current decline could indicate growing interest in Bitcoin, potentially driven by macroeconomic factors or major developments like regulatory changes or institutional adoption. While Bitcoin price dropped under $105K, altcoins are facing even steeper correction today.
As a result, the Bitcoin’s dominance has bounced back to the crucial resistance line. Crossing this trendline could market the end of the altcoin season hinting at capital rotation back into Bitcoin.
Crypto analyst Altcoin Sherpa has advised caution as the market faces more downside volatility, particularly with Bitcoin’s ongoing price action. In a recent statement, Sherpa noted that the market will likely surge once Bitcoin stabilizes. However, if Bitcoin continues to decline to lower levels, altcoins will likely remain under pressure. Sherpa also cautioned traders to be careful with leverage in these uncertain market conditions.
Despite the sharp fall in the altcoin season index, crypto market analysts continue to remain hopeful. Crypto analyst Michael van de Poppe has raised concerns about a potential bearish divergence in Bitcoin’s price action.
Despite this, van de Poppe anticipates a strong revival for altcoins once Bitcoin undergoes consolidation. He suggests that while Bitcoin may face some challenges, altcoins could see significant growth once the leading cryptocurrency stabilizes.
Another analyst Miles Deutscher stated that the actual altcoin season will happen between January-May 2025 wherein ETH is likely to significantly outperform BTC. During this period, ETH price averages 28% returns per month, against 3% during the rest of the month. He said:
“There’s a clear seasonal pattern. Historically, Ethereum’s returns spike considerably from January to May. This seasonal boost, nicknamed “alt-season,” isn’t just a random fluke, statistical tests show that it happens consistently over many years”.
He further added that historically, Ethereum has outperformed Bitcoin by approximately 20% per month during altcoin season, indicating a shift of capital from BTC to ETH. The inflows into spot Ethereum ETF have also picked up pace in the past few weeks, but ETH currently struggles to break past the crucial resistance of $4,000.
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