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Will there be a Crypto Alt Season soon?
The possibility of an Alt Season has been a topic of discussion between traders in recent weeks and months, main trigger being that the cryptocurrency markets continue to stagger. But is this clear evidence that an Alt Season is imminent? With many alt coins (coins other than Bitcoin) now at yearly lows, there does not seem to be much appetite for a meteoric rise in Alts on the horizon. Let’s examine what an Alt Season actually is.
When discussing the cryptocurrency investment industry, there’s very little in terms of historical reference. At present time, There’s not much data supporting alt coins in terms of stock valuation metrics like Price/Earnings ratio, given that most of them are relatively young in the market.
Without these valuation metrics, alt coins are given value when relating them to each other, rather than relating them to each coin’s individual merits. Leading to a large and unusual correlation standard in market valuations, based more on previous cryptocurrency market cycles than the actual worth of any particular asset.
Alt Season and Bitcoin dominance
It’s important to highlight that one of the previous cryptocurrency markets cycle was branded as an alt season, a term that was used to describe the value Bitcoin had in relation to all the other coins in the market. In terms of Cryptocurrency History, two major surges in altcoin dominance have been witnessed, both happened during the 2017 bull market when Bitcoin got an increase of 60% in just 5 weeks.
Things have been quite rosy in BTC world for the past several months. After the “crypto winter,” a year of price drops and doldrums, the much-vaunted crypto spring sent BTC rising back up; crypto summer has sustained the price over $10,000. It has since dipped below that and is currently trading at $7,690* whilst most other alts are actually back to the lows experienced in late 2018 early 2019.
Now that we are into autumn, a rather unique set of circumstances has the market poised to move in either direction. Perhaps most notably is the fact that for the last several weeks, BTC dominance–the ratio of capital in Bitcoin markets to the amount of capital in altcoin markets–has been hovering around 70 percent. This is the highest that it has been since July of 2017.
Several events over the course of the last two months have been speculated as being the driving force behind the latest upward movements in BTC dominance.
*This price is true at time of publishing
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Launch of Bakkt will fuel an alt season?
The most “popular” theories seem to be connected to two announcements of institutional products: first, the announcement that the Intercontinental Exchange-backed cryptocurrency futures trading platform, Bakkt, will finally launch after a year of delays; second, the launch of VanEck/SolidX’ so-called “limited ETF”, and the upcoming October SEC decision on the full ETF.
A number of analysts have predicted that the launch of Bakkt will bring a wave of institutional capital into cryptocurrency markets (particularly Bitcoin’s). This means that a number of holders have possibly been stocking up on BTC in anticipation of a possible price run.
At present, however, things don’t appear to indicate that we will have any price push in the near future. Rather, the launch of Bakkt has seen prices go down considerably after a mini-revival last week.