Crypto analysts warn against buying altcoins – here’s what needs to happen first
Investors in the cryptocurrency market are constantly on the lookout for the next ‘altcoin season’ to make a killing. However, according to cryptoanalysts Austin Arnold and Ben Cowen, it may not be the right time to invest in altcoins just yet. In a recent video analysis, the duo warned investors against buying altcoins right now.
The Importance of Bitcoin Dominance
Bitcoin dominance is a measure of the total market capitalization of Bitcoin relative to the total market capitalization of all cryptocurrencies. As Austin pointed out, dominance is already at 52.5% right now when you exclude stablecoins.
This means that altcoins have been continuously devalued on their Bitcoin pairs throughout this market cycle. Ben said that to really get to the end of the altcoin reckoning, the altcoin seasonal index indicator needs to get back to around five or so, which hasn’t happened yet.
As the two pointed out, Bitcoin’s dominance isn’t going to go higher forever. They predict that it is likely to reach around 65% this time, which is not much higher than the current level.
As we all know, Bitcoin dominance occurs when Bitcoin goes up, not when Bitcoin goes down. The implication of dominance is that it shows the flow of the cycle. Once the dominance is at a high level, a lot of money can flow into the altcoin market and investors can splurge.
The Altcoin Seasonal Index Indicator
The Altcoin Season Index indicator tells investors whether the market is in Bitcoin season or altcoin season based on the previous 90 days. Austin explains that every year and a half, two and a half years, the metric has to get to this deep value of the Bitcoin season where the metric comes down to around five or so.
In the last cycle, the altcoin seasonal index had a double bottom where it entered the Bitcoin season a bit, but it only lasted a couple of months before everything took off again. This move is very similar to what we had in 2019, where there was a double bottom on the altcoin seasonal index indicator,” Austin said.
Investors need to be cautious about investing in altcoins at this point in the market cycle. According to Arnold and Cowen, altcoins may not be worth the risk again until the completion of the altcoin calculation after Bitcoin has truly regained the market capitalization percentage it should be at. They advise investors to wait to buy altcoins until Bitcoin dominance reaches a much higher level.
