Bitcoin experienced a significant correction on February 20, dropping by up to 4% from its daily high of $53,019 to a low of $50,812, threatening to wipe out the gains made over the past seven days. This pullback has prompted traders to reassess the overall cryptocurrency market situation, sparking a debate on whether the altcoin season has arrived or not.
Traders and market analysts believe that the current price drop is part of the five stages of the halving cycle, suggesting that BTC might be undergoing a retreat before the anticipated post-halving parabolic uptrend. Rekt Capital, a cryptocurrency analyst, shared a chart on February 15 indicating that Bitcoin may experience “one final correction before Halving” before continuing its upward trend.
Independent market analyst Sjuul noted the high funding rates, warning that BTC could witness broader corrections. In my opinion, this presents a buying opportunity that we’ve all been looking for.
Market intelligence firm Santiment pointed out significant actions from mid-sized traders, serving as excellent signals for “profit-taking” and “buying the dip.” Over the past two weeks, holders of stablecoins ranging from $10,000 to $100,000 have added $44.3 million to USDT, indicating their readiness to buy at lower prices in case of a retreat.
Altcoins have demonstrated outstanding performance over the past 12 months, with some doubling or even tripling in value, outperforming Bitcoin. According to data from CoinMarketCap, while Bitcoin has increased by 107% in the past year, Solana (SOL) has surged by 308%, Avalanche (AVAX) by 80%, and Chainlink (LINK) by 136%.
However, recent data from Glassnode suggests that Bitcoin and Ethereum are leading with annual increases of 17.6% and 18.2%, respectively, surpassing the overall altcoin market performance. Glassnode analyst Alice Kohn noted that the overall market cap of altcoins has not performed similarly, with its growth since the beginning of the year being less than half that of the two largest cryptocurrencies.
Despite signs pointing towards an altcoin season, it’s still too early to confirm. Glassnode’s alternative season indicator has shown positive momentum since October, turning bullish on February 4 after pausing due to the Bitcoin ETF spot event in January.
Data from Blockchain Center indicates that only 59% of the top 50 altcoins have outperformed BTC over the past 90 days. While this percentage has increased in recent days, it’s still not enough to declare an altcoin season. According to Glassnode, for an altcoin season to begin, this percentage needs to exceed 75%.
In conclusion, while signs of an altcoin season are converging, it may still be too early to make this call. Glassnode suggests that their altcoin indicator shows more mature and potentially sustainable growth in the altcoin market, but it remains relatively focused on higher-market-cap assets at this time.