Altcoin Season? Bitcoin Price Rise Falling Behind These Tokens (We See You AAVE, CRO, SOL…)

Key Takeaways

• Altcoins have outperformed Bitcoin in recent weeks as investors shifted their focus to riskier assets.
• Bitcoin’s market dominance has worsened. 
• The Federal Reserve is not cutting liquidity that could support the price of altcoins.

When investors shift their focus from Bitcoin to altcoins, the value of the latter tends to rise dramatically, marking the beginning of an altcoin season.

While Bitcoin (BTC) hovered around $35,300 within the last seven days, alternative cryptocurrencies, or altcoins, saw gains of over 10% as investors shifted to riskier tokens.

Altcoin Market Explodes

The AAVE price saw a weekly increase of 18% to $97.18 on Wednesday, November 8, at the time of writing. On Tuesday, November 7, the volume traded in a day surged by 152% to $316.22 million. At the same time, the cryptocurrency’s market capitalization increased by more than 15% to $1.49 billion.

Solana (SOL) jumped almost by 10% within a week and stood at $43.18 at the time of writing. Also, thanks to the introduction of its Firedancer testnet, Solana (SOL) has increased by 80% in just one month, indicating a bullish trend even though it is not at its all-time high. During its presale, VC Spectra (SPCT) jumped by 588%, indicating investor confidence and the promising potential of blockchain and digital enterprises.

The price of Cronos (CRO) has risen by 3.6% to $0.08 in the last day. CRO has increased by more than 35% in the last week, from $0.06 to its current price. The coin’s all-time high is $0.91.

Other large-cap digital assets saw gains of 5% to 6% on the previous day, including the native tokens of the layer 1 networks Cardano (ADA) and Avalanche (AVAX), the well-known meme token Dogecoin (DOGE), the token of the oracle network Chainlink (LINK), and the token of the decentralized exchange UniSwap (UNI).

Blur’s token (BLUR), which is part of the non-fungible token (NFT) ecosystem, increased in value by 32% this week, more than doubling in only one month as the platform gets ready to give away 300 million tokens to customers through an airdrop on November 20.

Bitcoin Dominance Decline Calls For An Altcoin Season

In contrast, Bitcoin has been moving inside a narrow range on either side of $35,300 on Wednesday. Also not much has changed with Ether (ETH).

Even though the outperformance of altcoins has only been observed for a few days, it may indicate that traders will keep transferring their gains from Bitcoin’s roughly 30% October rise into lower-cap digital assets.

According to TradingView statistics , Bitcoin’s market cap dominance, which gauges the largest cryptocurrency asset’s market share of the whole cryptocurrency market capitalization, dropped to 52.5% on Monday from roughly 54.3% in late October, which was a 30-month high.

According to Matteo Greco, research analyst at Fineqia International , “the decline in dominance after five consecutive weeks of increase marks the first signs of heightened investor interest in altcoins, suggesting a riskier market stance.”

“BTC dominance typically shifts in two key moments of market cycles: after reaching a peak and entering a downtrend, and after reaching a low and commencing a new cycle. The recent shift indicates new investors entering the market, as it follows a long period of market downtrend.”

“The rise in BTC dominance over the past few weeks resulted from investors exiting various altcoin positions and shifting their focus to BTC, awaiting the chance to redirect these funds into emerging altcoins for the upcoming cycle. The decline in dominance after five consecutive weeks of increase marks the first signs of heightened investor interest in altcoins, suggesting a riskier market stance,” Greco stated.

Fed Not Cutting Liquidity Good News For Markets

Macroeconomically speaking, following the most recent FOMC meeting, the Federal Reserve (FED) kept interest rates unchanged for the second straight meeting, implying a less aggressive monetary tightening. Market players foresee a first 25bps drop during Q2 of 2024 and do not expect any more rate increases. This suggests that the Fed may have peaked in interest rates and will not be cutting market liquidity any further from its current levels, which bodes well for the financial markets.

With the SEC’s ultimate ruling on the 21Shares filing and other mirrored submissions anticipated in a few months, attention is still on the BTC Spot ETF filings. The SEC is expected to either approve or reject all applications based on their similarities, without giving any issuer a first-mover advantage. The deadline for the decision on the 21Shares application is January 10, 2024.

The clearance of the SEC would probably draw significant investments from the traditional finance sector, attracting high net worth individuals and strengthening the position of digital assets as a generally recognized asset class. On the other hand, considering the current investor optimism that an approval is imminent and the sentiment of the market, a refusal would probably have a negative short-term effect.