Is Altcoin Season On? Here’s What Glassnode Data Says
February 21 2024 - 4:00PM
NEWSBTC
Here’s what the “Altseason Indicator” from the on-chain analytics
firm Glassnode says regarding if an Altcoin season is currently
going on or not. What Altseason Indicator Says Regarding The
Altcoin Season In its latest weekly report, Glassnode has discussed
what the Altcoin season status for the cryptocurrency market has
looked like recently. To check whether the “altseason” is on, the
analytics firm has devised its Altseason Indicator. This metric
judges if the investors are in a risk-on mode based on how capital
rotations are occurring in the sector. There are two conditions the
indicator checks for. Related Reading: Bitcoin FOMO Hasn’t Spiked
Yet: Green Signal For Rally To Continue? First, the Altseason
Indicator looks at the capital netflows involving the three major
asset classes in the sector: Bitcoin (BTC), Ethereum (ETH), and
stablecoins. For the former two assets, netflows are gauged using
their “realized caps.” The realized cap is a capitalization model
that calculates any asset’s total valuation by assuming that the
real value of any token in circulation is the price at which it was
last moved rather than the current spot price. The last transfer
for any coin was likely the last point at which it changed hands,
so the price at the time of that transaction would be its current
cost basis. As such, the realized cap sums up the cost basis of
every holder in the sector. Put another way, the realized cap
measures the actual amount of capital the investors have put into
the asset. Thus, changes in the metric would reflect the amount of
capital flowing into or out of the asset. For the stablecoins, net
flows can be judged based on the supply or market cap alone, as the
stables’ value remains tied to $1 at every point, so the magnitude
of the market cap and realizes cap would be equal (both of these
would also equal the supply, except for the unit). For the Altcoin
Season to be active, all three asset classes should have positive
netflows. This is because capital generally enters the
cryptocurrency sector through these coins and only then rotates
into altcoins as investors’ appetite for risk rises. The other
condition the Altseason Indicator checks for is the momentum in the
altcoin market cap itself. In particular, the metric confirms
whether or not the altcoin market cap is currently over its 30-day
simple moving average (SMA). The data of the Altseason Indicator
over the past few years | Source: Glassnode's The Week Onchain -
Week 8, 2024 The chart shows that the Altseason Indicator first
started flashing the risk-on signal in October of last year.
However, the signal turned off when the market cooled off following
the launch of the Bitcoin spot ETFs. Related Reading: Solana,
Chainlink Among Coins With Overheating Open Interest: Data After
staying off for 22 days this month, though, the Altseason Indicator
seems to have been saying that the Altcoin season is back on. BTC
Price At the time of writing, Bitcoin is trading around the $50,900
level, down 1% in the past week. Looks like the price of the asset
has gone down over the past day | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Glassnode.com, chart from
TradingView.com
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