Cryptocurrency markets are heading into the long-awaited altseason, which could bring great excitement to speculative traders, but according to a prominent market analyst, the deciding factors may have been different.
“Stablecoin liquidity” to determine next alt season
The cryptocurrency market is changing, with cyclical indicators, market structures, and trading patterns changing rapidly.
“Altseason is no longer defined by Bitcoin’s asset cycle,” CryptoQuant CEO Joo Ki-young wrote in a December 2 post on X.
According to Young JU, the traditional signal signaling the start of altcoin season, when capital moves from Bitcoin (BTC) to altcoins, is outdated. Instead, there was more altcoin trading volume for stablecoin and fiat pairs than for BTC.
relevant: Altcoins likely to remain choppy until Bitcoin shows ‘vigorous movement’ — analyst
For example, total altcoin trading volume against Bitcoin pairs has remained fairly low over the past few weeks, despite the rise in Ether (ETH) price over the same period. Moreover, several altcoins such as XRP (XRP) and Solana (SOL) are near all-time highs, while Bitcoin price has consolidated below $100,000.
Meanwhile, the right chart below shows a surge in total altcoin trading volume for stablecoin pairs, which increased along with the rise in ETH price.
This reflects “actual market growth rather than asset circulation,” Mr. Ki explained.
We aggregate altcoin trading volume for BTC and stablecoin trading pairs. Source: CryptoQuant
These changes signal a deeper and more sustainable evolution in cryptocurrency markets, driven by the improved liquidity and stability of stablecoins.
“Stablecoin liquidity better explains altcoin markets.”
Ki added that the nature of capital flowing into Bitcoin has changed compared to previous market cycles. Unlike the retail-driven capital flows of previous bull cycles, the current bull market is primarily driven by institutional capital flowing into physical Bitcoin exchange-traded funds (ETFs).
source: Youngju Ki
Meanwhile, the market caps of all cryptocurrencies except BTC currently remain well below their all-time highs, indicating a decline in new liquidity from new exchange users.
“For altcoins to reach all-time high market caps, significant new capital will need to flow into cryptocurrency exchanges.”
Alt season is here
The performance of altcoins appears to be consistent with improvements in the Altcoin Season Index, indicating that altcoin season is approaching. According to this index from Blockchain Center:
“If 75% of the top 50 coins outperformed Bitcoin over the last season (90 days), then this is altcoin season.”
Altcoin Seasonal Index. Source: Blockchain Center
This indicator essentially shows that 73% of the top 50 altcoins have outperformed Bitcoin over the past 90 days. This index has increased sharply over the past few days and is approaching the 75% threshold.
With several top cryptocurrencies challenging new highs, market participants should keep an eye on stablecoin liquidity and the Bitcoin dominance index. This could signal the start of altcoin season over the next few days.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.