- The dominance level of Bitcoin has reached a potential reversal area.
- The hype around meme coins signals an upcoming altcoin season, but ETF inflows from institutions may delay its start.
- The trigger for the start of the altcoin season will be Ethereum’s price breakthrough above $3500.
The two- to three-digit weekly growth in meme coin prices such as DOGE, SHIB, BONK, PEPE, and WIF serves as an early sign of an altcoin season, according to K33 Research.
When will the altcoin season properly arrive?
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— K33 Research (@K33Research) March 1, 2024
According to Coinglass, open interest in perpetual contracts for SHIB exceeded $100 million for the first time since August 2023.
CoinDesk noted that such episodes in the past have been harbingers of Bitcoin reaching a local peak.
The trading volume of PEPE in the last 24 hours reached a record $3.6 billion. According to CoinGecko, the token’s daily price increase was 68.9%, with a weekly rise of 434.5%.
K33 calculated that since November 2022, Bitcoin’s dominance has doubled. The current situation is comparable to the end of 2020, when a shift in this trend occurred.
“Historically, altcoins will start to grow at a faster pace,” wrote the analysts.
Experts warned that timing could be a “risky sport.” The current situation is distinguished by the approval of spot Bitcoin ETFs. As a result, “there are no guarantees” that flows will be directed into lower-capitalization assets.
“There is enough risk appetite to trigger a rally mode in a few select cryptocurrencies. But in the altcoin arena, we have yet to see a new wave of retail investor funds that will lift all boats,” the report states.
K33 Research also noted the increase in trading activity on South Korean exchanges. Their daily turnover reached $8 billion, whereas before the Bitcoin rally, it was around $1 billion. Clients of these platforms are known for their focus on altcoins.
Will Bitcoin Reach a New ATH?
Analysts pointed to the potential for digital gold to reach a new ATH near $69,000, as demand for ETFs is ten times the number of coins mined.
“OTC platform reserves have decreased from ~10,000 BTC in Q2 2023 to less than 2,000 BTC. ETF issuers will have to buy directly on exchanges. We expect a resumption of inflows into IBIT from BlackRock. If daily outflows from GBTC by Grayscale decrease to less than $100 million, the price of the first cryptocurrency will make a significant upward leap,” they commented.
Signal for the Start of Altcoin Season
Experts at Swissblock also identified signs of an impending altcoin season. In their view, the average yield of the category relative to Bitcoin “is reaching a bottom and may soon reverse.” Confirmation will come with Ethereum’s breakthrough of the $3500 level, they added.
Analysts at Bybit assessed the share of altcoins in retail investors’ portfolios at 28.8% as of January 31, while for institutions it was 5.16%.