A bit of a breather for the price trend of altcoins: how much longer until the altseason?

In recent months, the trend of altcoins in the crypto markets has been characterized by a period of significant distress.

For some days now, however, at least this period seems to have ended, even if another clearly positive one has not started. 

However, it is possible to state that a small part of the losses from the past weeks has been recovered, with a mini-rebound that could be promising. 

The Total3: index of the performance trend of altcoins

To get an overall idea of the trend of altcoins, it is advisable to analyze the daily variations of the so-called Total3, the total market capitalization of crypto but excluding Bitcoin, Ethereum, and the main stablecoins.

It should be remembered that Bitcoin alone accounts for more than 60% of the entire crypto market capitalization, and if you add Ethereum, USDT and USDC it exceeds 75%. This means that altcoins as a whole account for less than a quarter of the entire crypto market.

The all-time high of Total3 was reached in December, above 1.160 billion dollars. It is worth noting that the all-time high of 2021 was 1.130 billion, so between November and December the altcoin as a whole merely returned to their previous historical highs, without significantly outperforming them. 

As of January 18, the Total3 was still above 1.100 billion dollars, even though it had already dipped below the 900 mark in the second half of December. 

All this already painted a picture that was not particularly bullish, except in the short term.

The real problem arrived with the beginning of February, because in just three days it fell from more than 1,000 billion to less than 750. However, that drop seemed to be only temporary, because it was followed by a rapid rebound, but in the second half of February it was followed by another decline that erased all the gains from the rebound. 

A bit of a breather for the trend of altcoins

After once again falling below 760 billion dollars on February 28, with the month of March Total3 is experiencing a new rebound.

The current one is a bit slower than the one at the beginning of February, and it is happening in an atmosphere that seems less gloomy than the previous one. 

Moreover, on Monday the Total3 had already returned above $900 billion, only to plunge back below $780 billion the following day. This latest drop was also followed by a rebound, so now there have been three rebounds in the last five weeks. 

Note that the crypto market tends to follow the trend of Bitcoin’s price, especially in its more challenging phases, and the price of BTC in turn tends to be inversely correlated to the Dollar Index.

Well, the Dollar Index has been declining since mid-January, to the point of having fallen well below 105 yesterday for the first time since Trump’s electoral victory in early November. 

The Bitcoin season

To tell the truth, however, since February 24, the crypto markets have fully entered the so-called Bitcoin season, which is the opposite of the altseason.

According to CMC’s altseason index, the current value is 14 points, well below the threshold of 25 points below which the Bitcoin season begins. Obviously, the threshold of 75 points above which the altseason begins is currently very far away.

However, it should not be forgotten that very often the bull runs of the crypto market are born right in the middle of Bitcoin season, because it is often the trend of the BTC price that triggers them. 

In the second half of November, as soon as the price of Bitcoin surged past $90,000, a mini-altseason began, lasting only a little over two weeks, and concluded by early December. Since then, altcoins have stopped outperforming Bitcoin overall, and in less than three weeks, the altseason index returned to around the neutral mark of 50 points.

Therefore, already in December, the bullrun of altcoins came to an end, and starting from February, there was a perhaps inevitable retracement. 

The role of Ethereum (ETH) in this cycle

In addition to Bitcoin and the main stablecoins, Ethereum, which is the main altcoin, is also excluded from the Total3. 

Note that if the Total3 has a current value of about 860 billion dollars, Ethereum alone capitalizes 275 billion, which is about a third of all the other cryptos combined. Bitcoin, on the other hand, capitalizes 1,800 billion, much more than Ethereum and the Total3 combined. 

This shows how the role of Ethereum as the main altcoin has diminished over time, while on the other hand, it shows how the crypto markets are still dominated by Bitcoin. 

The trend of the ETH price turns out to be significantly worse compared to that of the Total3.

In fact, while the current level of Total3 is still significantly higher than the 630 billion dollars of October, the price of Ethereum has also fallen below the minimum of $2,300 of that month. 

After rising to $4,100 in December, it first fell to around $3,300, then at the beginning of February it returned to the levels of October, and then at the end of February it fell even to $2,000. This is the lowest point since November 2023, and it was reached last Tuesday. 

What seems to weigh most on the price trend of Ethereum are the consequences of the large liquidation in August by Grayscale, when it transformed its fund into an ETF and was able to liquidate the enormous amount of ETH accumulated during the great bullrun of 2021. 

Just consider that before the stock market debut of that ETF, which took place in July 2024, the price of Ethereum fluctuated between $3,000 and $3,500, while after the debut it plummeted to $2,100 in just three weeks. 

Subsequently, it managed to climb back above $2,500 in October, but in December it failed to approach the all-time highs of 2021.