[Insight] Something Is Happening with Altcoin… Alt Season Is Coming?
Tags: Insight, Bithumb, Season, Altcoin, Bitcoin

[Insight] Something Is Happening with Altcoin… Alt Season Is Coming? bithumb_official Follow Jan 18 · 6 min read

On the last 7th of this month, an event occurred that will go down in the history of the cryptocurrency business. After Bitcoin exceeded USD 37,000 for the first time, the aggregate market price of overall cryptocurrencies has surpassed the level of USD 1 trillion. Its scale surpasses the aggregate market price of Samsung Electronics Co., Ltd. (KRW 543 trillion) that had delighted the Korean individual investors who have purchased domestic companies’ stocks after the COVID-19 Pandemic. Though the price of cryptocurrencies is a bit staggering due to the recent adjustments, the new record of USD 1 trillion is meaningful indeed since it proves that cryptocurrencies have solidified their position as one of the major assets. Now, Bitcoin stands firmly as a digital gold that draws the attention of the world’s institutional and individual investors.

Coin Investor’s Curiosity: “Will the Alt Season Come?”

In such tidings, there is one thing that many coin (cryptocurrency) investors are wondering. And the question is, ‘Will the Alt season, a season that Altcoin’s price rise surpasses that of Bitcoin, come.’ In 2017, when cryptocurrencies were leading the trend of investment, such happenings occurred quite often. Since the aggregate market price of Altcoins is smaller than Bitcoin, their price variability is greater. And there were not a few investors who have earned high profits. Especially in Korea, there were many investors who prefer Altcoins rather than Bitcoin. As a result, major Altcoins such as Ethereum, XRP, Stellar Lumen, and Litecoin have shown a steep price rise, up to hundreds to thousands%.

When Bitcoin broke its own record, it was a sign of the coming of Alt season. The reason for Altcoins’ price rise is complicated. It can be due to the anxiety and fatigue about the Bitcoin’s price rise or the expectations that Altcoin’s price will also rise, and so on. Recently, Bitcoin’s price has gone through USD 40,000, reaching the highest peak in its history. If so, does that mean the Alt season will also come in this rally?

Unusual rise of Altcoins… A Sign of Alt Season?

There was already a sign that indicates the upcoming Alt season. In the last 7th of this month, when Bitcoin’s price surpassed USD 37,000, other Altcoins such as Ethereum also shown a steep price rise. Ethereum’s price rose almost 10% than the day before. ADA, Stellar Lumen, and Chainlink have also shown a 15 to 21% of price rise. Experts of the field explained that investors who are growing anxious about the soaring price of Bitcoin are turning to Altcoins. Since Bitcoin has reached its peak, they do not expect further growth. So, they turn their gaze to the Altcoins that are still under-appreciated.

There were also several favorable factors for Altcoins. First of all, Ethereum, currently the largest Altcoin in the market, succeeded in drawing many investors’ attention due to the successful launch of Ethereum 2.0. Also, for the first time in 3 years since the release of Bitcoin futures, the Chicago Mercantile Exchange (CME) announced that it will release a futures product for Ethereum this February. There are also forecasts saying that DeFi that has stirred a yield farming boom will continue to lead the trend in this year. And that will be good for Ethereum. As you can see, Ethereum is showing constant growth as governance and platform, becoming an Altcoin that can match Bitcoin.

Stellar Lumen is also showing an amazing price rise since the recent announcement of the Ukraine government that they will utilize it for the development of their own Central Bank Digital Currency (CBCD). Not only the news about CBCD. Stellar Lumen is also considered as an alternative to XRP of Ripples, which was accused by the U.S. Securities and Exchange Commission (SEC) for the charge of selling unlisted security. And this draws even more attentions for the Stellar Lumen. According to Coinmarketcap, the price rise of Stellar Lumen was 86.73%, which is higher than Bitcoin’s (14.23%) or Ethereum’s (13.73%).

“Considering Bitcoin Dominance, It Is Premature to Judge.”

However, experts said that considering the Bitcoin Dominance, it would be premature to say that the Alt season already came. Bitcoin Dominance means the importance of Bitcoin in the aggregate market price of the overall cryptocurrency. Currently, Bitcoin Dominance is about 69%, which is 3% lower than that at the start of this January. That is to say, the importance of Bitcoin has declined while the Altcoin’s grown. However, the share rate of Bitcoin is still dominant.

From February 2017 to January 2018, when the Altcoin was on a fast track due to the initial coin offering (ICO) boom, Bitcoin Dominance was almost decreased to 37%. It was the time when Altcoin’s share was far exceeding that of Bitcoin’s. It was common to invest in more than one Altcoin back then. Not only the major coins but coins by new projects have also received fair attention. The past situation was far more different from now.

Since the recent bull market is led by institutional investors, it is hard to say that the Alt season will eventually come. The only target that the institutions are paying attention to is Bitcoin, the digital gold. The unique traits, such as its scarcity, its symbolic status as a representative cryptocurrency, and its irreplaceable nature, became a powerful weapon of Bitcoin, raising its value even further. Since it is expected that the institutional investors will lead the market just like last year, there are some forecasts saying that the gap between Bitcoin and Altcoins will grow even further.

Value Maketh Price… Key Factor for the Alt Season is ‘Value’

Since Bitcoin is receiving some adjustments, Altcoins are also fluctuating. There are even not a few coins that are showing a higher drop rate than Bitcoin. Under these circumstances, it is hard to convince the arrival of Alt season. But, as we have spoken before, there was some heartening news for some of the Altcoins. And if the cryptocurrency market manages to settle down and stabilized within the boundary of the formal sector, there will be more good news to be heard. In the long term, the price of cryptocurrencies is deriving from their value. We can only hope for the coming of true Alt season that enhancing the value of Altcoins themselves through a well-formed ecosystem, not just fluctuating because of the changes in Bitcoin.