The cryptocurrency market has long been subject to speculation regarding the next altcoin season (altseason). As enthusiasts eagerly await this phenomenon, one market analyst suggests that determining factors have undergone significant changes.
Stablecoin Liquidity: A New Era for Altcoins
The crypto market is undergoing rapid transformations. Cycle indicators, market structures, and trading patterns are evolving at an unprecedented pace. In a recent post on X (formerly Twitter), CryptoQuant CEO Ki Young Ju shed light on the changing landscape of altseason.
"Altseason is no longer defined by asset rotation from Bitcoin," he emphasized. This traditional signal, where capital rotates from Bitcoin to altcoins, has become outdated. Instead, the analyst observed that altcoin trading volume against stablecoin and fiat currency pairs has increased significantly.
The Shift in Altcoin Trading Volume
Let’s examine a few key indicators:
- Combined altcoin trading volume for Bitcoin pairs: Despite an uptick in Ether (ETH) price over the last few weeks, this combined volume has remained low.
- Altcoins near all-time highs: Several notable altcoins, such as XRP and Solana (SOL), have approached their previous highs while Bitcoin’s price has consolidated under $100,000.
In contrast, the chart below displays a sharp spike in aggregate altcoin trading volume for stablecoin pairs. This increase mirrors the growth of ETH price over the same period.
Source: CryptoQuant
Ki’s observations suggest that this change reflects real market growth, rather than asset rotation. The increased liquidity in stablecoins is driving a more sustainable evolution in the crypto market.
The Rise of Stablecoin Liquidity
Stablecoins’ growing stability and liquidity are influencing the altcoin markets. "Stablecoin liquidity better explains the altcoin markets," Ki noted.
In a departure from previous bull cycles, which were driven by retail capital flows into Bitcoin, the current cycle is being fueled primarily by institutional capital flows into spot Bitcoin exchange-traded funds (ETFs).
Market Capitalization and Fresh Liquidity
The market capitalization of all cryptocurrencies, excluding BTC, remains below its all-time high. This indicates reduced fresh liquidity from new exchange users.
For altcoins to reach a new all-time high in market capitalization, they will require a significant influx of fresh capital into crypto exchanges.
Altseason Nears
Despite the changing dynamics, the performance of altcoins appears to coincide with an improvement in the altcoin season index. This index, provided by Blockchain Center, suggests that the next altcoin season is close.
The Altcoin Season Index: 90-Day Performance
If 75% of the top 50 coins performed better than Bitcoin over the last 90 days, it signals an altcoin season.
Source: Blockchain Center
Currently, this index has increased to 73%, with several top-cap cryptocurrencies challenging new highs. Market participants should closely monitor stablecoin liquidity and the Bitcoin dominance index, which could signal the beginning of an altcoin season in the next few days.
Market Participants Take Note
While the article does not contain investment advice or recommendations, every trading decision involves risk. Readers should conduct their own research before making a decision.
