Altcoins
Is Altcoin Season On? Here’s what Glassnode data says
Here’s what the “Altseason Indicator” from on-chain analytics company Glassnode says about whether or not an Altcoin season is currently underway.
What the Altseason Indicator Says About Altcoin Season
In its latest weekly report, Glass knot discussed what Altcoin Season The status of the cryptocurrency market has been recent. To check if the “altseason” is activated, the analytics company designed its Altseason indicator.
This measure assesses whether investors are in risk mode based on how capital turnover occurs in the industry. The indicator checks for two conditions.
First, the Altseason indicator examines net capital flows involving the industry’s three major asset classes: Bitcoin (BTC), Ethereum (ETH), and stablecoins.
For the first two assets, net flows are evaluated using their “realized ceilings”. THE cap made is a capitalization model that calculates the total value of any asset by assuming that the true value of any token in circulation is the price at which it was last moved rather than the current spot price.
The last transfer of a coin was likely the last time it changed hands, so the price at the time of that transaction would be its current cost basis. As such, the realized cap summarizes the cost base of each sector holder.
In other words, the realized cap measures the actual amount of capital that investors have invested in the asset. Thus, changes in measurement would reflect the amount of capital flowing into or out of the asset.
For the stable coinsnet flows can be judged solely on the basis of supply or market capitalization, because the value of the stables remains tied to $1 at all times, so the magnitude of the market capitalization and that of the realized cap would be equal (both would also be equal to supply). , except for the unit).
For Altcoin season to be active, all three asset classes must have positive net flows. This is because capital typically enters the cryptocurrency sector through these coins and then only flows into altcoins when investors’ appetite for risk increases.
The other condition checked by the Altseason indicator is the dynamics of the altcoin market capitalization itself. In particular, the metric confirms whether the altcoin’s market capitalization is currently above its 30-day simple moving average (SMA).
The data of the Altseason Indicator over the past few years | Source: Glassnode's The Week Onchain - Week 8, 2024
The chart shows that the Altseason indicator started to emit the risk signal in October last year. However, the signal died down when the market cooled off after the launch of Bitcoin spot ETFs.
After being absent for 22 days this month, the Altseason indicator appears to indicate that Altcoin season is back.
BTC Price
At the time of writing, Bitcoin is trading around the $50,900 level, down 1% over the past week.
Looks like the price of the asset has gone down over the past day | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Glassnode.com, chart from TradingView.com