Author: BitpushNews

Recently, Bitcoin (BTC) has repeatedly refreshed its historical highs, once breaking through $123,000 per coin. Against the backdrop of Bitcoin's strong upward movement, significant capital rotation signs are emerging within the crypto market, with a batch of previously relatively quiet large-cap altcoins gradually becoming active, with their gains even surpassing Bitcoin's recent performance.

According to CMC market data, among the top 20 cryptocurrencies by market capitalization, some "veteran" Layer 1 (L1) altcoins have performed outstandingly, with a general 7-day increase reaching double digits. The leader is Stellar (XLM): as the 12th largest cryptocurrency by market cap, it has seen a weekly increase of 82%, leading among similar assets. ADA, ranked 10th by market cap, has a 7-day increase of nearly 30%; Ripple (XRP) 29%; Dogecoin (DOGE) 18%.

Some relatively newer altcoins, such as the L1 project Sei (SEI), which focuses on decentralized exchanges (DEX), and the synthetic dollar protocol Ethena (ENA), have also shown impressive gains, with 7-day increases exceeding 30%.

A recent research report from Delphi Digital pointed out that those long-established tokens that have experienced multiple bull and bear cycles have outperformed the AI and DePIN (Decentralized Physical Infrastructure Network) concept tokens that were highly regarded earlier this year.

Analysts suggest that the collective strength of veteran altcoins is interpreted as an early signal of retail funds potentially flowing back. These tokens represent cryptocurrencies that have existed for a longer time and have larger market capitalizations, and their activity often reflects retail market participation and funding preferences, while traders also remain attentive to emerging projects with innovative narratives and high growth potential.

The "BANANA ZONE 2.0" of Altcoins

Market observer @MerlijnTrader has been monitoring the TOTAL3 chart, which tracks the total market capitalization of cryptocurrencies excluding Bitcoin (BTC) and Ethereum (ETH), effectively reflecting the overall momentum of altcoins. He noted that the TOTAL3 chart is entering the "Banana Zone 2.0," which typically indicates that after a period of consolidation, the market is about to enter an explosive breakout phase.

This trader believes that compared to the altcoin wave of 2020, the upcoming market trend will be "larger, faster, and supported by real-world use cases and substantial funding." This suggests that the altcoin market may no longer be merely speculative frenzy but rather driven by fundamentals and institutional funding for more sustainable growth.

Signals of "Altcoin Season"

According to the definition of the CMC Altcoin Season Index, when 75% of the top 100 altcoins, excluding stablecoins and wrapped tokens, have outperformed Bitcoin over the past 90 days, it officially enters "altcoin season." This threshold reflects a broad market rotation of funds from Bitcoin's dominance to diversified altcoin growth.

Currently, the altcoin season index stands at 32/100, still far from the 75-point threshold, indicating that the market remains in a Bitcoin-dominated phase. However, the index has recently shown a positive upward trend (rising from 26 points last week to 32 points today), suggesting that early signs of rotation are emerging.

Key signals for the arrival of altcoin season include:

• Strengthening of altcoin dominance: In previous altcoin seasons (such as May 2021), the total market capitalization of the top 100 altcoins exceeded 130% of Bitcoin's total market capitalization. This expansion marks an increase in capital inflow into altcoins.
• Rapid price increases: Altcoins often experience dramatic price surges in a short period. At the beginning of 2021, the average return of large altcoins reached 174%, far exceeding Bitcoin's modest growth of only 2% during the same period.
• FOMO sentiment and retail frenzy: Altcoin seasons are typically accompanied by high 24-hour trading volumes and strong bullish sentiment. Market optimism leads to increased buying pressure, further driving up prices and attracting new participants.

An important feature of the current market is the decline in Bitcoin dominance. Crypto analyst Satori observed that historically, when Bitcoin's price remains stable or rises moderately while its share of the total crypto market capitalization declines, it is often seen as a sign of funds rotating from Bitcoin to altcoins, indicating the potential arrival of "altcoin season."

Satori pointed out that this pattern has been evident in historical cycles such as 2017 and 2021. Currently, altcoins have begun to perform broadly, with trading volumes steadily increasing, indicating that institutional and retail investors may be diversifying their funds into alternative digital assets, driven by multiple catalysts:

• Launch of spot ETFs: The introduction of spot Bitcoin and Ethereum ETFs in the U.S. provides a compliant entry point for institutional funds, unlocking significant institutional liquidity. When these funds flow into Bitcoin and Ethereum, some may spill over into altcoins with higher growth potential.
• Advances in Layer 2 (L2) solutions: The development of L2 technology enhances the scalability and efficiency of L1s like Ethereum, reducing transaction costs and supporting the implementation of more application scenarios, thereby benefiting altcoins within their ecosystems.
• The combination of artificial intelligence (AI) and blockchain, the development of real-world asset (RWA) tokenization, and the improvement of blockchain gaming infrastructure have all brought new value narratives and application prospects to altcoins, providing fundamental support.

Therefore, while it remains to be seen how long this "mini altcoin season" can last, the positive signals released by the market indicate that investors are re-embracing risk, injecting much-needed vitality into the market.

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