In the ever-evolving landscape of cryptocurrency, analysts suggest that altcoins may be poised for one final rally during this cycle. This assertion hinges on the premise that only those altcoins exhibiting genuine utility and strong network activity will witness significant price gains. Jamie Coutts, chief crypto analyst at Real Vision, shared his insights with co-founder Raoul Pal in a recent live session.
Decoding Network Activity as a Trading Indicator
Coutts emphasized the importance of monitoring network activity, asserting it will serve as the “north star” for crypto trading strategies. “While uncertainty lingers regarding the sustainability of this potential rally, I am optimistic that high-quality altcoins with increasing activity will facilitate a price recovery,” he stated.
As of January, Cointelegraph reported over 36 million altcoins in existence. However, Ethereum remains the dominant player, controlling 55.56% of the total value locked (TVL), followed by Solana, Bitcoin, BNB Smart Chain, and Tron, as per CoinGecko data.
“I expect to see altcoins gain momentum, especially if Bitcoin regains its all-time highs by June,” Coutts remarked.
This outlook is further supported by indications that Bitcoin could potentially return to all-time highs by the end of the second quarter, regardless of external factors such as regulatory and economic uncertainties.
The total crypto market cap has seen an 8% decline over the past 30 days. Source: CoinMarketCap
However, recent data reveals a troubling decline in blockchain network activity across the board amidst a broader crypto market downturn. For instance, the number of active addresses on the Solana network has plummeted nearly 40% from its November 2024 levels.
Red Flags for Altcoins
Despite the optimism expressed by Coutts, key indicators often utilized in forecasting an incoming altcoin season suggest that the timing for such a trend remains uncertain. The Altcoin Speculation Index has fallen to 12%, a staggering 53% decline since late December, during which Ether saw a similar loss.
Currently, the Altcoin Season Index indicates a score of 14 out of 100, reinforcing the idea that the market is still predominantly driven by Bitcoin, often referred to as “Bitcoin Season.”
The Altcoin Season Index Chart currently scores 14. Source: CoinMarketCap
Bitcoin dominance, a key metric for signaling potential retracements towards an altcoin season, presently stands at 62.84%. Some analysts argue, however, that the relevance of Bitcoin dominance as a definitive indicator has diminished, with trading volume now being a more reliable gauge for altcoin market trends.
In closing, while there is cautious optimism regarding a potential revival for select altcoins, investors are advised to remain vigilant and grounded in their analysis, as market conditions continue to fluctuate.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk; readers should conduct their own research before making decisions.
