ETH/BTC is a sign of the next altcoin explosion
Recently, experienced crypto investor Daan Crypto Trades provided a new perspective on assessing altcoin market sentiment.
Dern believes that the ETH/BTC ratio is a better indicator of altcoin market sentiment than the SOL/BTC ratio and presents data that hints at a possible upcoming altcoin season.
ETH/BTC vs. SOL/BTC: Decoding the true Artzbarometer
Daan Crypto Trades disputed the emerging view that SOL/BTC might be a better measure of altcoin strength and instead argued for the enduring relevance of ETH/BTC. Dern said that while Solana's performance was noteworthy, it did not significantly impact Bitcoin's dominance and remains strong.
This observation suggests that SOL/BTC may not accurately reflect trends in the broader alternative coin market. On the other hand, ETH/BTC has historically more closely reflected changes in altcoin market sentiment, making it a more reliable indicator.
This distinction is extremely important for investors seeking to understand the real-time health and potential changes within the broader altcoin market.
I see many people claiming that $SOL/BTC is a better proxy for general alternative strength than ETH/BTC.$SOL Due to the rise in BTC.D, the overall alternative market underperformed BTC.
Therefore, we cannot say that SOL/BTC is a good indicator of overall altcoin strength… https://t.co/8KpdnACoOt
— Daan Crypto Trades (@DaanCrypto) April 28, 2024
Daan's analysis points out that large swings in the ETH/BTC ratio often precede dynamic phases in the altcoin market, commonly referred to as “altcoin season.” These periods are characterized by rapid increases in the price of altcoins overall, often outpacing Bitcoin.
Signs of a new season for altcoins?
Current market analysis by Daan and on-chain data by Santiment highlight the formation of conditions that could lead to a new alt-coin season. Santiment’s report highlights an unusual accumulation pattern across altcoins, and their market value-to-realized value (MVRV) ratio suggests that many are undervalued.
More than 85% of analyzed altcoins are currently located in what Santiment calls historic “opportunity zones.” This zone indicates that an asset is trading below its realized value, indicating a potential buying opportunity for astute investors.
👍 According to our model, the average wallet's medium-term P&L shows large realized losses for most wallets. #altcoin. Calculating the wallet's market value to collective realized value (MVRV), over 85% of the assets we track are in the historic opportunity zone. pic.twitter.com/NogkCSH5PG
— Santiment (@santimentfeed) April 25, 2024
Further reinforcing this sentiment is the slight decline in the Bitcoin Dominance Index (BTC.D), which tracks Bitcoin's market capitalization relative to the overall crypto market. BTC.D has fallen from 57.10% as of mid-month to around 54.69% as of today.
This decline could signal that more capital is starting to flow into altcoins. In particular, Dern's argument that the combination of favorable MVRV ratios and changes in dominance means that alt-coin season is just around the corner and could be poised to generate significant gains similar to past cycles. gives credibility to.
Featured image from Unsplash, chart from TradingView
