‘Altcoin season’ hype starts as Ethereum looks bullish, Bitcoin struggles

• ETH’s positive outlook has heightened altcoin season calls. 
• With BTC faltering below $100K, will the current altcoin season trend be sustainable? 

According to market analysts, the much-awaited altcoin season could be here, citing strengthening Ethereum [ETH] price and momentum in the segment.

As the sector’s health barometer, ETH’s promising outlook added to the altcoin season calls. 

Jake Ostrovskis, an options and OTC (Over The Counter) trader at market maker Wintermute, noted that the elevated positive outlook for ETH was driving the capital rotation to altcoins.

“Is this time (bullish calls) different? The market thinks so. ATM volatility spiking, skew pushing to 12-month highs, and wings (10d) seeing a strong bid.” 

Source: Signal Plus

The implied volatility (IV) spike meant options traders were confident and bullish on ETH’s prospects. If so, that would lift the altcoin segment. 

Altcoin season status

Nicholas Merten of DataDash shared a similar sentiment on YouTube. The crypto analyst cited the dropping Bitcoin dominance (BTC.D) as a precedent for an extra rally for altcoins. 

Merten added that Others, which tracks the altcoin sector exclusive of the top 10 tokens, had reclaimed key levels and was above the 200-day MA (moving average).

This indicated improved momentum in the segment and the possibility for further traction. 

Despite the recent traction, a strong and full-blown ‘Altcoin season’ was not in play, according to the Blockchain Center’s Altcoin Season Index. 

The index reading stood near 50%, suggesting that only half of the top 50 tokens, like Stellar [XLM] and Dogecoin [DOGE], have outperformed BTC in the past three months.

An altcoin season can be called when over 75% top tokens outperform BTC. 

Source: Blockchain Center

That said, we had similar altcoin momentum spikes in July and September, which faltered when BTC’s dominance spiked. Will this time be different and sustainable? 

On the 25th of November, Ethereum, L2s, GameFi, and DeFi segments rallied double digits as BTC dipped below $95K.

However, Glassnode founders cautioned that a full-blown altcoin rally could only happen if BTC surged above $100K, followed by a decline in market dominance. They said, 

“But for a full-blown Altcoin season, we need BTC dominance to capitulate. Eyes on $100K —though a market shakeout may come first!” 

Source: Swissblock Technologies

From an ETH/BTC perspective, the outlook appeared cautiously optimistic. For context, a rally in the ETH/BTC ratio indicates ETH outperforming BTC, which is a net positive indicator for altcoins. 

But Wintermute’s Ostrovskis said the ETHBTC trend wasn’t clear enough for a sustainable, strong altcoin season, at least as of press time. He said, 

“For a full-blown ‘alt season’, #ETHBTC needs to sustain strength for more than a few sessions. Each bid in 2024 has been whacked, making the theme hugely important into year-end.” 

Source: ETH/BTC, TradingView