The "altseason" indicator is off the charts, but experts warn of a trap.
The Altcoin Cycle Signal indicator from the analytical platform Glassnode has re-entered the "altcoin season" zone, reaching a level of 86. However, unlike the classic scenario where altcoins rise amid a stable or growing Bitcoin, the current signal was triggered by a sharp decline in the BTC price.
Typically, a threshold of 50 points on this indicator signals that alternative cryptocurrencies are beginning to outperform Bitcoin in terms of returns. The current value of 86 is an extremely high level, which in the past was associated with massive altcoin rallies. But now the picture is fundamentally different.
Bitcoin is losing ground, but not to altcoins
According to my data, Bitcoin has lost 18% of its price over the past month. The main reason was macroeconomic factors: the hawkish stance of the U.S. Federal Reserve and expectations of further key rate hikes. Analysts at Bank of America, for example, forecast three rate increases this year. This traditionally puts pressure on risk assets, including cryptocurrencies.
It is the decline in BTC, rather than organic growth in altcoins, that, according to Glassnode experts, has led to distortions in the indicator. Sellers who had been pressuring the market for two years have virtually disappeared, but this is not a sign of a healthy market. Bitcoin's recovery is what will be the real test for altcoins. If altcoins continue to show outperforming dynamics as BTC rises, then we can talk about the start of a full-fledged altseason.
Market opinion: the "classic" altseason is over
Leading analysts, including Bitwise Chief Investment Officer Matt Hougan, agree that the era of total altcoin rallies, where all tokens grew "on the same wave," has ended. According to him, the market expects a non-traditional altseason, where only projects with a real business model and revenue will survive. CryptoQuant CEO Ki Young Ju also emphasizes that a new narrative alone is no longer enough for altcoin growth.
My analysis: The Glassnode signal is a classic example of how the same indicator can be misleading in different market conditions. The current "altseason" is more of an illusion caused by Bitcoin's weakness. Investors should be extremely cautious and not confuse a temporary bounce in altcoins amid BTC's decline with the start of a sustainable bullish trend. Fundamentally strong projects may show growth, but "junk" tokens will likely continue to fall.