Old coins lead the rise, has the mini alt season begun?

Written by: BitpushNews

Recently, Bitcoin (BTC) has repeatedly set new historical highs, surpassing $123,000 per coin at one point. In the context of Bitcoin's strong upward movement, significant signs of capital rotation are emerging within the cryptocurrency market, with a number of previously relatively quiet large-cap altcoins gradually becoming active, and their gains even exceeding those of Bitcoin in recent times.

CMC market data shows that among the top 20 cryptocurrencies by market capitalization, some "veteran" layer 1 (L1) altcoins have performed outstandingly, with a weekly increase generally reaching double digits. The leader is Stellar (XLM): as the 12th ranked cryptocurrency by market capitalization, it has a weekly increase of 82%, leading among similar assets. ADA, ranked 10th by market capitalization, has a 7-day increase of nearly 30%; Ripple (XRP) 29%; Dogecoin (DOGE) 18%.

Some relatively new altcoins, such as the L1 project Sei (SEI) focused on decentralized exchanges (DEX) and the synthetic dollar protocol Ethena (ENA), have also seen impressive gains, with a 7-day increase of over 30%.

A recent research report by Delphi Digital pointed out that long-established tokens, which have gone through multiple bull and bear cycles, have outperformed the AI and DePIN (Decentralized Physical Infrastructure Network) concept tokens that were highly regarded since January this year.

Analysts pointed out that the simultaneous strengthening of established altcoins is interpreted as an early signal that retail funds may be returning. These tokens represent cryptocurrencies that have existed for a longer time and have a larger market capitalization, and their activity often reflects retail market participation and funding preferences. Meanwhile, traders are also keeping an eye on emerging projects with innovative narratives and high growth potential.

shanzhai coin's "BANANA ZONE 2.0"

Market observer @MerlijnTrader has been monitoring the TOTAL3 chart, which tracks the total market capitalization of cryptocurrencies excluding Bitcoin (BTC) and Ethereum (ETH), effectively reflecting the overall momentum of altcoins. He noted that the TOTAL3 chart is entering the "Banana Zone 2.0", which typically indicates that after a period of consolidation, the market is set to enter an explosive breakout phase.

The trader believes that the upcoming wave of market activity will be "larger, faster, and supported by real-world use cases and huge amounts of capital" compared to the altcoin craze of 2020. This suggests that the altcoin market may no longer be just a speculative frenzy, but rather a more sustainable growth driven by fundamentals and institutional funds.

The signal of the "Shanzhai Season"

According to the definition of the CMC Altcoin Season Index, when 75% of the top 100 altcoins have outperformed Bitcoin in the past 90 days, excluding stablecoins and wrapped tokens, it officially enters the "Altcoin Season." This threshold reflects a broad market rotation of funds from Bitcoin's dominance to the growth of diversified altcoins.

Currently, the altcoin season index is 32/100, far from the threshold of 75 points, indicating that the market is still in a Bitcoin-dominated phase. However, the index has recently shown a positive upward trend (rising from 26 points last week to 32 points today), suggesting that early signs of rotation are beginning to emerge.

Key signals for the arrival of altcoin season include:

The dominance of altcoins is increasing: During the last altcoin season (such as in May 2021), the total market capitalization of the top 100 altcoins exceeded 130% of Bitcoin's total market capitalization. This expansion marks an increase in capital inflow into altcoins.

Prices are rising rapidly: Altcoins often experience sharp increases in a short period of time. At the beginning of 2021, the average return rate of large altcoins reached 174%, far surpassing Bitcoin's modest growth of only 2% during the same period.

FOMO sentiment and retail frenzy: The altcoin season is usually accompanied by high 24-hour trading volumes and strong bullish sentiment. Market optimism leads to increased buying pressure, further driving up prices and attracting new participants.

An important feature of the current market is the decline of Bitcoin Dominance. Crypto analyst Satori has observed that during historical cycles, when the price of Bitcoin remains stable or rises moderately, while its share of the total crypto market capitalization declines, this is often seen as a sign of funds rotating from Bitcoin to altcoins, thus signaling the possible arrival of "Altcoin Season."

Satori pointed out that this pattern has been reflected in historical cycles such as 2017 and 2021. Currently, altcoins have begun to show widespread performance, with trading volumes steadily increasing, indicating that institutional and retail investors may be diversifying their funds into alternative digital assets, driven by the combined effect of multiple catalysts:

The launch of spot ETFs: The U.S. spot Bitcoin and Ethereum ETFs provide a compliant entry point for institutional funds, unlocking a significant amount of institutional liquidity. When these funds flow into Bitcoin and Ethereum, some of the capital may spill over into altcoins with higher growth potential.

Advancements in Layer 2 (L2) solutions: The development of L2 technology has improved the scalability and efficiency of Layer 1 (L1) networks like Ethereum, reduced transaction costs, and supported the implementation of more application scenarios, thereby benefiting the altcoins within its ecosystem.

The combination of artificial intelligence (AI) and blockchain, the development of tokenization of real-world assets (RWA), and the improvement of blockchain gaming infrastructure have all brought new value narratives and application prospects to altcoins, providing fundamental support.

Therefore, while it remains to be seen how long the "Mini Altcoin Season" can last, the positive signals released by the market indicate that investors are re-embracing risk, injecting much-needed vitality into the market.