The 90-day moving average of altcoin trading volume on centralized exchanges has been on the rise since mid-November, potentially indicating the beginning of an altcoin season. According to CryptoQuant CEO Ki Young Ju, the trading volume ratio of altcoins compared to Bitcoin has increased from 1.77 to 2.77 as of February 20. This suggests that “alt season has begun,” with altcoin prices rising compared to BTC. Ki notes that stablecoin holders are favoring altcoins, leading to a surge in altcoin trading volume compared to Bitcoin. Despite this trend, trading remains concentrated on the four largest altcoins by market cap: Ethereum, XRP, BNB, and Solana.
While the altcoin/BTC trading volume ratio is increasing, the overall trading volume for stablecoin pairs remains steady, with a peak of $60.4 billion on February 3. Ki had previously warned that this bull cycle’s altcoin season would be “weird and challenging” due to insufficient liquidity to support the entire sector. As a result, only a select few altcoins are expected to significantly increase in value. He suggests that altcoins ready to rally to new highs should either create “paper-wrapped versions” like Bitcoin or build a decentralized ecosystem using stablecoins or BTC to ensure independent appreciation.
A recent Kaiko report revealed that the top 10 altcoins by market cap account for 64% of all altcoin daily liquidity, despite the total value almost doubling from September to February 11. Based on data from CryptoSlate, only 3 out of 22 altcoin sectors have registered positive year-to-date performances. The average crypto market performance year-to-date is currently at -24.9% as of February 21, with 13 altcoin sectors experiencing losses exceeding this threshold. This is equivalent to 59% of the entire altcoin market.
Overall, the increase in altcoin trading volume compared to BTC on centralized exchanges signals the potential beginning of an altcoin season. Stablecoin holders are favoring altcoins, leading to higher trading volumes and potential price increases. However, trading remains concentrated on the largest altcoins by market cap. The current market conditions suggest that only a few altcoins will experience significant gains, with the top 10 altcoins dominating daily liquidity. Despite challenges in the sector, there are opportunities for altcoins to rally through strategic approaches such as creating paper-wrapped versions or building decentralized ecosystems.
