The cryptocurrency market is on fire. The market capitalization has surged past $2 trillion for the first time in its history.
Interestingly enough, this was led mostly by alternative coins, or altcoins, surging in value. Bitcoin, on the other hand, failed to break above $60K on multiple occasions over the past month, giving serious merits to the notion that altcoin season 2021 is brewing.
In January this year, CryptoPotato reported that Secrets of Crypto, which is one of the well-known and respected cryptocurrency analysts, said the altcoin season for 2021 is just starting, and so far, it appears to be right.
With this in mind, let’s have a look at a few reasons for which this might be the case.
The bitcoin dominance is the best metric to gauge the relative strength of altcoins at any point in time. It’s a measurement of bitcoin’s share compared to that of the entire market.
As CryptoPotato reported earlier, the index currently sits at a 1-year low below 56%. The last time this happened was all the way back in 2019.
It’s also important to note that the BTC dominance index broke below a critical ascending support trend-line just a few days ago, allowing altcoins to gain even more steam.
The serious decrease in Bitcoin’s dominance has allowed many altcoins to increase their USD value, but also their BTC value. This goes for large, mid, and even small-cap cryptocurrencies, which is a definitive sign that the altcoin season is in the making and brings us to our next point.
As can be seen on the following BTC dominance chart, compared to the biggest-ever altcoin season which took place towards the end of 2017 and January 2018, there is much more room to go down.
Cryptocurrencies with medium or lower market capitalization have absolutely exploded in value in the past few weeks. In fact, the surges are so sudden, and there are plenty of examples of that.
The most recent example came from WazirX. Sitting on a total market capitalization of around $1.07 billion, the project is up a whopping 1400% in the past month alone.
What is even more interesting is that it’s the 97th biggest project, and it still has a billion-dollar market cap. This goes to show how much the entire cryptocurrency space has grown over the past few months, doubling itself over the past two months alone.
But the examples don’t stop there – we saw bigger projects such as BitTorrent surge by more than 2000% in a couple of weeks and by almost 750% in a month. There are plenty of other examples such as THETA, Filecoin, and so forth.
This shows that capital is flowing from Bitcoin to altcoins in a very definitive manner. It’s also one of the strongest signs that an altcoin season is brewing.
All of the above lines up very well with a narrative commonly expressed by the analyst SecretsOfCrypto. In a post from February, the analyst outlined the flow of capital and how it happens during altcoin supercycles.
We can already see that the money is going out of Bitcoin into other cryptocurrencies, perfectly showcased in the plummeting BTC dominance. He also describes market psychology and how the interest shifts and accelerates toward altcoins.
Data from Google Trends confirms this:
As seen above, the interest in “altcoins” is increasing throughout 2021. The good news is that it’s nowhere near the peak of late 2017, just as the BTC dominance, so there might be more room to grow.
This is another major signal that altcoin season is blossoming. Back in late 2017 and early 2018, we saw plenty of tokens offered through initial coin offerings (ICOs) skyrocket for tremendous gains. In fact, this is likely to have been the biggest trend of that epic bull-run, apart from Bitcoin hitting $20K for the first time in history, of course.
Now, there’s another trend that seems to have surpassed the ICO hype – non-fungible tokens (NFTs).
CryptoPotato reported earlier in March that NFT saw higher retail interest than ICOs back in 2017-2018. This was highlighted by the sale worth a whopping $69 million of Beeple’s NFT called “Everydays: The First 5,000 Days.”
