The altcoin indicator has surged to 86, but the market warns: this is not the season everyone is used to.
The Altcoin Cycle Signal indicator from Glassnode has once again broken through the critical 50-point mark and stabilized at 86. Formally, this means that the "altcoin season" has arrived on the market. However, analysts warn that the current signal has a completely different nature compared to previous cycles.
Typically, the activation of this indicator signals that alternative cryptocurrencies are starting to outperform bitcoin in terms of returns, while the market flagship maintains stability and attracts liquidity. This time, it is different. The main driver of the indicator's growth was not the strengthening of altcoins, but a sharp drop in bitcoin. Over the past month, BTC has lost 18% of its value, which automatically boosted the relative performance of other coins.
Sellers in the altcoin market have practically dried up after two years of intense pressure, creating a technical basis for a rebound. However, bitcoin continues to decline amid macroeconomic uncertainty. The main blow to risk assets is being dealt by the hawkish stance of the U.S. Federal Reserve. The market is pricing in the possibility of at least three rate hikes this year, making borrowed funds more expensive and reducing appetite for speculative instruments, including cryptocurrencies.
Dual nature of the signal
Glassnode experts note that the current "altcoin season" signal is technical, not fundamental. The rise of altcoins is occurring solely against the backdrop of bitcoin's weakness. If BTC begins to recover, a true altcoin season will only be confirmed if altcoins continue to grow while bitcoin is strong.
Not all market participants share optimism about a classic altseason. Grayscale's Head of Research, Zach Pandl, adheres to a baseline scenario in which the Fed refrains from further policy tightening. In this case, a reduction in macroeconomic risks could support both bitcoin and altcoins. However, CryptoQuant CEO Ki Young Ju and Bitwise Chief Investment Officer Matt Hougan agree that the era of a total rally for all altcoins is over. Only projects with real revenue and a working business model will survive.
My comment: The current signal is more of a warning than an invitation to buy. The altcoin market has become more mature and selective. Investors should focus not on "season" indicators, but on the fundamental metrics of specific projects. The classic altseason, when all coins rise "on autopilot," is a thing of the past.