- Bitcoin continues to soar after crossing $100,000 earlier this month.
- Altcoins have yet to take off.
- Market analysts say altcoin season is imminent.
Bitcoin is consolidating above $100,000 and heading into “uncharted waters.”
Altcoins, however, have struggled to keep up with Bitcoin’s barnstorming run this year.
Apart from XRP, Solana and a few other cryptocurrencies, the altcoin market has largely lagged Bitcoin’s growth in 2024.
Ethereum, crypto’s second-biggest asset, is perhaps the best indicator of the underperformance of altcoins compared to Bitcoin.
It’s up only 69% this year, compared to Bitcoin’s 150% year-to-date performance. Unlike Bitcoin, Ethereum is yet to equal its all-time high from the last bull market in 2021.
Still, market analysts say Ethereum will still play its role as the bellwether for altcoin season.
“Historically, when momentum shifts from Bitcoin to Ether, it signals a broader market confidence in altcoins ― or the start of altcoin season,” Mena Theodoru, co-founder of crypto exchange Coinstash, told DL News.
Altcoin season
Altcoin season or altseason is a period of price increase in the broader crypto market.
During a bull market, when Bitcoin cools, Ethereum heats up and altcoins begin to rally.
When that happens, Bitcoin’s dominance of the total cryptocurrency market value usually dips below 40% ― Bitcoin accounts for 54% of the $3.86 trillion crypto market.
Bobby Zagotta, CEO of crypto exchange Bitstamp USA, said altseason is imminent.
“We’re on the brink of it,” Zagotta told DL News.
“We are seeing altcoins outperform Bitcoin, and their market capitalisations are hitting new highs,” Zagotta said. “This is a market-wide transformation and could be a prelude to an altcoin season, one that could rival what we saw in 2021, with a potential bull market driving further innovation.”
Ether’s role in heralding the altseason received a boost this month as its price crossed $4,000 for the first time since March.
Theodoru said Ether’s recent price performance served as indications of a “potential altcoin rally.”
Apart from Ethereum’s price rally, Theodoru also identified the over $2 billion in inflows into Ether exchange-traded funds this month as another signal that investors were piling into altcoins.
Ethereum vs Solana
Ethereum’s role as the altcoin leader could come under threat from a major rival, Solana, whose price has more than doubled this year.
Price isn’t the only metric in which Solana has bested Ether this year.
Solana attracted more new developers into its fold than Ethereum for the first time ever, according to a recent report by crypto venture firm Electric Capital.
Anmol Singh, co-founder of Solana-based decentralised derivatives trading protocol Zeta Markets, says Solana’s just getting started.
“Solana is on track to cement itself as the dominant player in DeFi and on-chain applications by 2025,” Singh told DL News.
Already, Solana has outpaced Ethereum in decentralised exchange trading volume with major apps on the network reporting greater earnings from fees than their Ethereum counterparts.
A large part of Solana’s bustling trading activity is due to memecoins.
Regulatory clarity
Retail trading has historically driven altcoin rallies.
XRP’s recent price surge was largely due to retail frenzy in South Korea.
Uncertainty over the regulatory status of most cryptocurrencies often precludes institutional players from investing in altcoins.
But that could change with the incoming administration in the US.
President-elect Donald Trump has promised crypto-friendly laws and market analysts say a new wave adoption could follow for altcoins.
“The regulatory climate for altcoins is entering a transformative phase and investors are watching every move he [Trump] makes,” Theodoru said.
The incoming US president has also been creating a significant altcoin investment footprint via the Trump-backed World Liberty Fund DeFi project.
World Liberty has invested $12 million in Ether, Chainlink and Aave. Their respective tokens rallied to three-year highs in response as copy traders piled into those assets.
Regulatory clarity for altcoins could also mean a raft of crypto ETF approvals next year.
Big money players piling into crypto ETFs could boost altcoin prices as was the case for Bitcoin this year.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at osato@dlnews.com.
