Bitcoin (BTC) encountered a significant decline on February 20, dropping by as much as 4% from its intra-day high of $53,019 to a low of $50,812. This correction has raised questions about whether the altcoin season is upon us.
Traders and analysts attribute this price pullback to the five phases of the Bitcoin halving cycle. They suggest that BTC may be experiencing a pre-halving retrace before entering an anticipated post-halving parabolic uptrend. Rekt Capital, a crypto trader and analyst, shared a chart indicating that Bitcoin has one final pre-halving retrace left before resuming its upward trend.
Sjuul, an independent market analyst, highlighted the high funding rates for BTC, indicating that a correction across the entire market can be expected. Market intelligence firm Santiment noted that significant moves from mid-tier traders often serve as signals for profit-taking and dip buying, suggesting that they may be preparing to buy the dip in the event of a pullback.
Altcoins have displayed impressive performance over the past year, with some outperforming Bitcoin. Solana’s SOL, Avalanche’s AVAX, and Chainlink’s LINK have all achieved double- and triple-digit gains. However, Bitcoin’s year-to-date performance surpasses the aggregate altcoin market capitalization.
Glassnode data indicates that while BTC and ETH have had year-to-date gains of 17.6% and 18.2%, respectively, Bitcoin’s dominance in the market continues to grow. The capital inflows into Bitcoin currently amount to approximately $20 billion per month. Glassnode suggests that capital moves down the risk curve into altcoins at a slower pace compared to the rotation between Bitcoin and Ethereum.
While some indicators suggest the possibility of an altcoin season, it may still be too early to confirm. Glassnode’s altseason indicator has shown positive momentum since October 2023 and turned positive again on February 4. However, for an altseason to be declared, a higher percentage of the top 50 altcoins must outperform Bitcoin.
In conclusion, signs of an altcoin season are starting to emerge, but it may be premature to make a definitive statement. Readers should conduct their own research and exercise caution when making investment decisions.