Market expert Lark Davis has recently taken to social media to assert that the much-anticipated altcoin season is far from over despite short-term corrections and challenges the broader crypto market faces.
Davis believes that significant opportunities lie ahead for altcoins, particularly as their total market capitalization (excluding Bitcoin and Ethereum) hovers around $1.05 trillion.
Key Factors For Impending Altcoin Season
The expert that the current altcoin market cap is nearing its previous high of $1.13 trillion from November 2021. He recalls a similar scenario from February 2021, when the altcoin market cap tested the highs from January 2018 before breaking through.
This breakout resulted in an impressive surge from $360 billion in February 2021 to $1.13 trillion by November 2021—an increase of over 200%. Davis firmly believes that once the altcoin market cap surpasses the $1.13 trillion threshold again, we could witness one of the largest altcoin seasons in the history of cryptocurrency.
Several contribute to Davis’s optimism regarding the impending altcoin surge:
- Bitcoin’s Performance: Currently at all-time highs, the Bitcoin price strength often catalyzes interest in altcoins.
- Political Transition: With Donald Trump set to take office in just 34 days, market sentiment may shift favorably towards cryptocurrencies.
- Global Rate Cuts: Central banks worldwide are reducing interest rates, which typically increases liquidity in the market.
- Increased Capital Investment: An influx of cheap capital is making its way into the cryptocurrency space, setting the stage for potential growth.
- Risk-On Environment: The current market conditions are among the strongest for risk-on assets, creating an ideal backdrop for altcoin investment.
Rally Anticipated As Bitcoin Dominance Rises
Echoing Davis’s sentiments, crypto analyst Miles Deutscher that the real altcoin season has yet to commence. He points to compelling historical evidence suggesting that alt-seasons are not mere coincidences but rather distinct seasonal phenomena backed by statistical patterns.
Historically, Ethereum (ETH) has shown impressive returns from January to May, often outperforming Bitcoin during this period. During these months, Ethereum averages about 28% monthly returns, compared to a mere 3% for the rest of the year.
In addition, the analyst asserts that the current environment is particularly favorable for this rotation, as Ethereum has historically outperformed Bitcoin by approximately 20% per month during alt-seasons.
As Bitcoin’s performance strengthens, so too does the likelihood of capital flowing into Ethereum and other altcoins. This rotation is already observable in the recent surge in Bitcoin dominance, which has mirrored patterns seen in previous alt-seasons around 2017 and 2021.
At the time of writing, ETH, the largest altcoin on the market, is trading at $3,686, down 4.4% over the 24-hour period and nearly 6% over the week.
Featured image from DALL-E, chart from TradingView.com