What is Altcoin Season Index?
The Altcoin Season Index tracks whether investor interest points towards altcoins or Bitcoin. Normally, if three-quarters of the top 50 coins by market capitalization outperform Bitcoin over the last quarter (3 months or 90 days), the index could be called altseason.
On the other hand, if 75% of the top 50 coins cannot outpace Bitcoin regarding price performance in the last season (90 days), then there is Bitcoin Season.
Altseason is when there are more inflows into alternate coins than into the largest digital asset by market capitalisation, BTC.
Importance of Altcoin Season Index
Savvy crypto traders and investors use the altcoin season index to make decisions on whether they have to invest in altcoins or inject more money into Bitcoin.
A great example of the relevance of the Altcoin Season Index can be attributed to the current crypto climate, which is the second quarter (April to June) of 2022.
In April, the crypto altcoin season returned as Bitcoin dominance faded. An index of 100 tokens outperformed Bitcoin in March. Investors who wanted to diversify their assets in case Bitcoin plunged to new high lows bought more altcoins. They were not wrong, as the market crash of May led by Do Kwon's Terra project signaled a steep decline in all cryptocurrencies, with Bitcoin taking much of the fall.
In April, May, and June, the top 50 cryptocurrencies - including Ethereum (ETH), Binance Coin (BNB), Cardano (ADA), Ripple (XRP), Solana (SOL), Dogecoin (DOGE), Polkadot (DOT), TRON (TRX), Avalanche (AVAX), Shiba Inu (SHIB), Polygon (MATIC), FTX Token (FTT), Litecoin (LTC), Chainlink (LINK), Stellar (XLM), Uniswap (UNI), and Bitcoin Cash (BCH) - have not outperformed Bitcoin.
Although BTC has reached the same price levels as 2020, collectively, these cryptocurrencies and others have shed more in market value. Therefore, we can say that we are in Bitcoin Season and not altseason. It is not surprising to see trader interest reflected in the liquidity of Bitcoin. Though much of this is related to huge selling due to the bearish trends of the market, high investor interest relative to a low-priced asset is a sign of positive reserve risk.
How does Altcoin Season Index Relate to Bitcoin Fear and Greed Index?
Bitcoin Fear and Greed Index and Altcoin Season Index rely on BTC to make conclusions about crypto seasons.
Bitcoin Fear and Greed Index presents a bull market when the index is closer to 100 (greed) and a bearish market when the index is closer to 0 (fear). The performance of altcoins is measured against that of Bitcoin.
In conclusion, while we are not in an altcoin season in June, there is fear in the market concerning holding Bitcoin.
Author: Brendan Beeken
Moni Talks Founder and Chairman Brendan Beeken is an entrepreneur, commercial strategist, investor, and philanthropist. He writes on a wide range of subjects, including cryptocurrency, decentralised finance, blockchain, business advice, and professional wellbeing, for news and business websites, as well as Latest Moni and his personal site, brendanbeeken.com. Brendan draws from his own research and more than two decades of personal experience in business to offer a unique insight, perspective, and commentary on diverse subjects. He is passionate about making the cryptocurrency space more accessible and encouraging safer and more responsible trading and investing. Brendan's LinkTree is https://linktr.ee/brendanbeeken.