Altcoin Season Expectations Diminish Amid Weakening Momentum
Recent observations indicate that hopes for an altcoin season are dwindling, as signs of diminishing momentum become apparent. While FTX is set to make a $5 billion repayment on May 30, potentially providing a liquidity boost, there is a notable trend of capital moving back into Bitcoin. The resurgence of Bitcoin’s market dominance, coupled with a decline in the ETH/BTC ratio, suggests that altcoins are currently losing their appeal. The Altcoin Season Index has fallen to 25, reinforcing the notion that Bitcoin is in the driver’s seat for the time being.
FTX’s $5 Billion Repayment May Spark June Altseason — But Momentum Is Dwindling
FTX is preparing to distribute over $5 billion to approved creditors on May 30, marking a significant event in the realm of crypto bankruptcy payouts. Analysts speculate that this influx of liquidity could rejuvenate altcoin activity in June, as creditors may reinvest their funds into the market. In the meantime, Bitcoin’s market share has seen fluctuations — it dropped from 65.5% to below 62.2% between May 7 and May 13, leading to speculation about a potential altcoin season. However, that optimism has since faded, with Bitcoin’s dominance rebounding by 3% from May 14 to May 20, signaling a shift back toward Bitcoin.
Declines in ETH/BTC Ratio Indicate Weakening Altcoin Strength
A critical indicator, the ETH/BTC ratio, supports this narrative of waning altcoin strength. Following a significant increase of nearly 38% in Ethereum’s value against Bitcoin from May 7 to May 13, the ratio subsequently fell by 8.7% in the week after, suggesting that Ethereum is losing its relative strength. This shift in performance diminishes the prospects of an altcoin season, even with the anticipated influx of capital from FTX’s repayment.
Altcoin Momentum Weakens as Market Cap Declines — Will FTX Liquidity Revive It?
The total market capitalization of cryptocurrencies, excluding Bitcoin, currently stands at $1.17 trillion. This represents an increase from $1.01 trillion on May 7 but is a stark decline from $1.26 trillion on May 13, indicating a retreat in altcoin investment. This drop of nearly $90 billion in just one week highlights a lack of sustained confidence in a full-blown altcoin rally. Nonetheless, the impending $5 billion liquidity boost from the FTX repayments could provide the necessary capital for altcoins to regain momentum and potentially initiate an altcoin season in June. Meanwhile, the Altcoin Season Index, monitored by CoinMarketCap, has plummeted from 43 on May 9 to 25, signaling a clear shift to Bitcoin Season territory. This index tracks the performance of the top 100 cryptocurrencies (excluding stablecoins and wrapped assets) over the last 90 days, and a reading below 25 indicates Bitcoin’s dominance.
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