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Significant declines in Ethereum, Solana, and XRP lead to a 12-month low likelihood of Altcoin Season as Bitcoin shows resilience.
Altcoins are experiencing a further downturn as investors gravitate towards Bitcoin in light of rising geopolitical tensions and a risk-averse atmosphere.
Data from CoinGlass indicates that the Altcoin Season Index has fallen to 12, marking its lowest point in nearly a year, which signifies a growing disinterest in cryptocurrencies other than Bitcoin.
Altcoin Season Index (Source: Coinglass)
The Altcoin Season Index measures the performance of non-Bitcoin assets in comparison to Bitcoin. A low reading implies that altcoins are significantly lagging, highlighting a general shift towards safer investments in uncertain market conditions.
This trend has intensified over the past month, as rising tensions between Israel and Iran, along with concerns about U.S. involvement, have driven investors towards more stable assets like Bitcoin.
Bitcoin dominance rises
In light of this, Shawn Young, Chief Analyst at MEXC Research, informed CryptoSlate that the prospects for a conventional altcoin season remain ambiguous.
He noted that previous cycles have typically seen altcoins gain traction in the later phases of a bull market, but the current market dynamics suggest a different trajectory. Institutional investors are now influencing the market, and their preference for Bitcoin, regarded as both a hedge and a source of liquidity, continues to hinder the recovery of altcoins.
He added:
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“As long as volatility remains heightened and macro risks persist, capital rotation into altcoins may stay constrained.”
This transition became apparent over the weekend when Ethereum dropped to $2,130, its lowest level since May, while Solana, XRP, and other notable altcoins experienced declines exceeding 7%. As of the latest update, ETH has rebounded to $2,260.
Although Bitcoin briefly fell below $100,000, it swiftly recovered to $101,000. Consequently, its dominance in the overall cryptocurrency market has risen above 65%, the highest level since early 2021.
Bitcoin Dominance (Source: CoinMarketCap)
A different altseason
Meanwhile, Young highlighted that there remains the possibility for a new form of altseason focused on robust Layer-1 networks such as Ethereum, Solana, and XRP.
He stated that these platforms support essential infrastructure like real-world asset tokenization, DePIN protocols, and stablecoin issuance, which are gaining traction among institutional investors.
He observed that interest in these high-potential altcoins could resurface if Bitcoin stabilizes above $100,000 and macroeconomic risks diminish. Furthermore, the introduction of spot ETFs for these Layer-1 assets may act as a future catalyst that could rekindle interest in these digital currencies.
The post Major Ethereum, Solana, XRP losses cause chance of Altcoin Season to drop to 12 month low amid Bitcoin strength appeared first on CryptoSlate.
