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Waiting for the altseason? Glassnode says it is not yet time.



Key facts:
  • Bitcoin holders continue to increase their holdings.

  • “Poor interaction with exchanges stands out,” highlights the analytics firm.

Glassnode, the cryptocurrency market analysis firm, presented in its latest report, released Oct. 10, a series of indicators showing when there is a rotation of capital from bitcoin (BTC) to other cryptoassets (altcoins), thus forming an altseason.

An altseason is an extended period, during a bull market, in which these cryptocurrencies generate better returns than bitcoin because of its growing demand. That is why it is a highly anticipated moment for some traders.

The analysis company indicates that historically bitcoin tends to lead the digital asset market and market confidence flows toward the cryptocurrency of Ethereumether (ETH), and then further down the risk curve.

According to the analyst firm, a powerful tool for identifying capital turnover is to visualize the realized capitalization of BTC and ETH over 30 days, as well as the total supply of BTC and ETH. Stablecointo identify whether these activities record inflows or outflows.

When BTC, ETH, and stablecoins show capital inflows, this indicates that. the market’s appetite for risk has turned on.. On the other hand, if any of these assets experience outflows, risk aversion prevails, as is currently the case.

The green in the graph below reflects moments of risk activation, while the red reflects moments of deactivation. Source: Glassnode: Glassnode.

With this view of risk activation/deactivation environments, Glassnode warns that filter only events where capital rotates toward Ethereum and stable coins.because when this happens it means that interest in risk has increased generating altseason mania.

Here we see in yellow the times when risk has turned on and in red the times when altseason mania has turned on. Source: glassnode.

To verify the existence of altseason, Glassnode notes that. a sharp drop in bitcoin’s capitalization must occur. in the cryptocurrency market over the past 30 days.

The blue line shows the decline in bitcoin’s dominance, coinciding with altseason periods (marked in red). Source: Glassnode.

Current illiquidity creates volatility for altcoins

According to the analysis model described above, Glassnode indicates that the current scenario suggests that there is no risk-interest regime leading to an altseason.This makes sense given the current lack of liquidity available for digital assets.

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According to their data, liquidity continues to dry up for digital assets due to the fact that interaction with the exchanges and capital flows are at cycle lows, “largely underscoring the current acute market apathy.”

The research firm explains that the current wide fluctuations in altcoin valuation are a symptom of the prevailing low liquidity environment. In fact, because there is little trading activity, the prices of some altcoins experience strong movements when their buying or selling strength increases.

On the bright side, long-term bitcoin investors, so called because they hold their holdings for more than 155 days, remain steadfast. Their accumulated BTC holdings continue to rise to new all-time highs, reducing selling pressure and helping keep the price from falling.

This last factor is critical because if this long-term bitcoin holding behavior strengthens, it will help form an upward rush when demand increases. And this would potentially lead to greater risk appetite and increased demand. takeoff Of another season.

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