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Bitcoin (BTC) did not skyrocket after Fed chair Jerome Powell delivered favorable remarks on Friday. The rise was expected, albeit a sharper one. Meanwhile, another segment of the crypto market is back in the spotlight – alternative coins. To be precise, altcoins minus stablecoins and all forms of wrapped cryptocurrencies.
According to Sheldon Sniper, who streams his crypto trading strategy on YouTube (Crypto Banter), an alt season is right around the corner and he’s going all in. While his analysis is compelling, there’s a catch.
Defining Altcoin Season
According to the widely circulated charts from Blockchaincenter(dot)net, alt season isn’t here, nor is alt month. But what exactly is an alt season and alt month? Blockchaincenter(dot)net provides a simple definition.
If the 75% alternate coins (altcoins), excluding stablecoins and wrapped coins, of the top 50 cryptos, outperform BTC over the past 90 days (90 days = 1 season), the crypto market is said to be in an alt season. If the outperformance lasts at least 30 days, it’s called an alt month.
On the other hand, if only 25% or under outperform in the same period, it’s called a Bitcoin season.
The above chart shows that 57% of the top 50 coins have outperformed BTC in the past 90 days. Yesterday, that figure was 60%.
Per Blockchaincenter(dot)net, it has been 247 days since the last Alt season, and 45 days since the last Bitcoin season.
While it’s clear that an alt season isn’t here yet, the chart suggests that an alt season may be imminent.
Trader: Alt Season Up Ahead!
In his August 22nd (pre Jackson Hole) analysis, Sheldon Sniper said that there are three signs of an incoming alt season – two bitcoin short squeezes; Ethereum’s (ETH) breakout; and a drop in BTC (market cap) dominance.
The first of the two BTC short squeezes, Sniper suggests, will be at $120,000, and the second would occur when it reaches new all-time highs (ATH).
As of writing, BTC was trading at $114,568.61, down 0.46% in the past 24 hours. Over the past seven days, it was down 2.5% and over the past month, it was down 1.7%.
Notably, BTC’s reaction to the positive remarks of Fed Chair on Friday was not big, although it was positive. Meanwhile, ETH was trading at $4,938.45 at press time. It was up 3.95% intraday, up 10.3% over the week. Over the past month, it was up 35%. It is relatively closer to new ATHs than BTC.
BTC is getting closer to a reversal, and the latest charts suggest that ETH is inching closer to new ATHs.
Lastly, CoinMarketCap data shows that BTC dominance is marginally down to around 56.9%, down 3.92% intraday. BTC dominance is the percentage value of BTC’s share of the overall crypto market cap. Last month, this metric was 61%.
On the other hand, ETH dominance rose more significantly, reading 14.8% at press time, it was up 3.5% intraday. Last month, this metric stood at 11%.
If BTC surges past the $116,000 towards new ATHs, all the signs for an alt season would be captured.
Another trader pointed out that the drop in USDT dominance was a sign that the alt season had kicked in.
Altcoin Season Phases – Second Phase Started?
The trader further pointed out that an altcoin season usually plays out in four phases. The first involves Bitcoin accumulating money. In the second phase, Ethereum begins to outperform Bitcoin; in the third phase, other large-cap altcoins show similar super surges. The fourth phase is the peak of the alt season, which ATHs of several large-cap altcoins other than ETH would mark.
After the fourth phase, BTC returns to reign as the dominant crypto in terms of market cap.
According to Sheldon, the second phase has begun, given ETH’s performance in the last few days.
Also, Sheldon pointed out that Solana (SOL), Cardano (ADA), and other large-cap altcoins would surge through this alt season. He noted that SOL might test waters near the $200 mark when funds begin to flow into ETH and subsequently other altcoins.
Overall, these might be solid signs that the alt season is upon us. However, a confirmation would be accepted universally when the aforementioned definition of alt season holds true.
Notably, traders like Sheldon are expecting to ride the wave generated by the retailers who will be driven by the fear of missing out (FOMO). Therefore, it is essential to understand that alt season might be nothing more than a short-lived high-volatility phase. More importantly, it might lead to sharp drops.
