Bitcoin (BTC) underwent a significant correction on February 20, dropping by as much as 4% from a high of $53,019 to a low of $50,812. This decline has led traders to reassess the overall state of the crypto market and sparked a debate about whether the altcoin season is upon us.
According to traders and market analysts, the current price crash is part of the five phases of the Bitcoin halving cycle. They believe that BTC may be experiencing a pre-halving retracement before entering the expected post-halving parabolic uptrend. A chart shared by crypto trader and analyst Rekt Capital suggests that Bitcoin has one more pre-halving retrace left before resuming its upward trend.
Funding rates for BTC were high, indicating a potential correction across the board, according to independent market analyst Sjuul. Market intelligence firm Santiment pointed out that significant moves by mid-tier traders often work as signals for profit-taking and dip buys, suggesting that some traders may be preparing to buy the dip in the event of a pullback.
Altcoins have performed well in the past year, with some outperforming Bitcoin and posting double- and triple-digit gains. Data from CoinMarketCap shows that Bitcoin has rallied 107% in the last 12 months, while other altcoins like Solana’s SOL, Avalanche’s AVAX, and Chainlink’s LINK have also experienced significant gains.
Although Ethereum began to outperform Bitcoin following the approval of spot Bitcoin ETFs in January, its performance fell behind Bitcoin’s on February 8, according to Glassnode. The on-chain analytics firm also notes that Bitcoin’s dominance in the market has continued to grow, with approximately $20 billion in capital inflows per month. This dominance is reflected in Bitcoin’s market share of over 52% of the total digital asset market cap.
While signs of an altcoin season are starting to emerge, it may still be too early to confirm its arrival. Glassnode’s altseason indicator has shown positive momentum since October 2023 and turned positive on February 4. However, data from Blockchain Center shows that only 59% of the top 50 altcoins have outperformed Bitcoin in the last 90 days, indicating that the altcoin season has not fully taken hold yet.
In conclusion, although the market is showing signs of an altcoin season, it may be premature to declare it. Investors should conduct their own research and exercise caution when making investment decisions.