Under the backdrop of Bitcoin hitting new highs, veteran altcoins are showing signs of recovery.

Recently, the price of Bitcoin has repeatedly refreshed its historical high, surpassing $123,000 at its peak. While Bitcoin is on a strong upward trend, there are obvious signs of capital flow within the crypto market, and some previously relatively calm large old alts are gradually becoming active, with increases even exceeding that of Bitcoin.

Data shows that among the top 20 cryptocurrencies by market capitalization, some "veteran" layer 1 public chains have performed outstandingly, with a weekly increase generally reaching double digits. Among them, Stellar (XLM), ranked 12th by market cap, has stood out with a weekly increase of 82%. Additionally, ADA, ranked 10th by market cap, has increased by nearly 30%, XRP by 29%, and DOGE by 18%.

Some newer alts projects have also performed well, such as the L1 project SEI focused on decentralized exchanges and the synthetic dollar protocol ENA, both of which have increased by over 30% in the past 7 days.

Research reports indicate that the overall performance of long-established tokens, which have a rich history and have experienced multiple bull and bear cycles, has even surpassed that of the AI and DePIN concept tokens that were highly关注ed earlier this year. This phenomenon is interpreted as an early signal that retail funds may be flowing back, while also reflecting traders' ongoing interest in emerging projects with innovative narratives and high growth potential.

Are the altcoin markets entering "Banana Zone 2.0"?

Market observers have been monitoring the TOTAL3 chart, which tracks the total market capitalization of cryptocurrencies excluding Bitcoin and Ethereum, effectively reflecting the overall momentum of alts. The observations indicate that the TOTAL3 chart is entering the "Banana Zone 2.0", which usually implies that after a period of consolidation, the market will enter a phase of explosive breakout.

Some traders believe that the upcoming wave of market activity may be "larger and faster than the altcoin surge of 2020, with real-world use cases and substantial funding backing it." This suggests that the altcoin market may no longer be merely a speculative frenzy, but rather a more sustainable growth driven by fundamentals and institutional capital.

Signal of "altcoin season"

According to the definition of the altcoin season index, when 75% of the current 100 altcoins have outperformed Bitcoin in the past 90 days, it officially enters the "altcoin season". Currently, the index stands at 32/100, far from the threshold of 75 points, indicating that the market is still in the Bitcoin-dominated phase. However, the index has recently shown a positive upward trend, rising from 26 points last week to 32 points today, suggesting that early rotation signs are beginning to emerge.

The key signals for the arrival of the altcoin season include:

1. The dominance of alts has strengthened: During the previous altcoin season, the total market capitalization of the top 100 alts exceeded 130% of Bitcoin's total market capitalization.
2. Rapid price increase: At the beginning of 2021, the average return of large alts reached 174%, far exceeding Bitcoin's moderate growth of only 2% during the same period.
3. FOMO sentiment and retail frenzy: altcoin season is usually accompanied by high 24-hour trading volume and strong bullish sentiment.

An important feature of the current market is the decline of Bitcoin's dominance. Historical experience shows that when Bitcoin's price remains stable or rises moderately while its share of the total cryptocurrency market capitalization declines, this is often seen as a sign of funds rotating from Bitcoin to alts, indicating the possible arrival of "altcoin season."

Currently, alts have begun to perform generally, with trading volume steadily increasing, indicating that investors may be diversifying their funds into other digital assets. This trend arises from the combined effects of multiple factors:

1. The launch of the spot ETF provides a compliant entry channel for institutional funds, unlocking a large amount of institutional liquidity.
2. The advancements in Layer 2 solutions have improved the scalability and efficiency of public chains, providing support for the implementation of more application scenarios.
3. The combination of artificial intelligence and blockchain, the development of tokenization of real-world assets, and the improvement of blockchain gaming infrastructure have brought new value narratives and application prospects for alts.

Although the duration of the "Mini Altcoin Season" remains to be seen, the positive signals released by the market indicate that investors are re-embracing risk, injecting much-needed vitality into the market.