Altcoins
Is Altcoin Season On? Here’s What Glassnode Data Says
Here’s what on-chain analytics firm Glassnode’s “Altseason Indicator” 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 node discussed what the Altcoin Season The state of the cryptocurrency market has been changing recently. To check whether the “altcoin season” is underway, the analytics firm has designed its Altseason indicator.
This indicator assesses whether investors are in risk mode based on how capital turnovers occur in the sector. The indicator checks two conditions.
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First, the Altseason indicator looks at net capital flows involving the industry’s three main asset classes: Bitcoin (BTC), Ethereum (ETH), and stablecoins.
For the first two assets, net flows are measured using their “realized ceilings”. cap made is a capitalization model that calculates the total valuation 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 cryptocurrency probably corresponds to the last time it changed hands, so the price at the time of that transaction corresponds to its current base price. Thus, the realized cap summarizes the base price of each holder in the sector.
In other words, the realized cap measures the actual amount of capital that investors have invested in the asset. Thus, changes in this indicator would reflect the amount of capital flowing into or out of the asset.
For the stable coinsNet flows can be judged on the basis of supply or market cap alone, since the value of the stables remains tied to $1 at each point, so the magnitude of market cap and market cap would be equal (both of which would also equal supply, except for unity).
For the altcoin season to be active, all three asset classes must see positive net flows. This is because capital typically enters the crypto sector through these cryptocurrencies and then only turns to altcoins when investors’ appetite for risk increases.
The other condition that the Altseason indicator checks is the momentum of the altcoin’s market cap itself. In particular, the metric confirms whether the altcoin’s market cap 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 a risk signal in October last year. However, the signal died down when the market cooled down after the launch of Bitcoin spot ETFs.
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After being absent for 22 days this month, the Altseason indicator seems 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