Few traders can argue that Bitcoin (BTC) is in a bull market, but there is less agreement on whether the market is in the middle of the “alternative currency season”. A quick glance at Crypto Twitter reveals a rift between traders who think we are halfway through the alternate season, and those who think it has not started yet.
Traders usually rely on a wide range of indicators and calculations such as the total market value of bitcoins versus the total market value of a digital currency, the degree of bitcoin dominance and the growth of a cryptocurrency by a certain percentage.
As with the investment, many signals can sometimes lead to mixed results, so Cointelegraph decided to talk to Ben Lilly, co-founder and analyst at Jarvis Labs, to find out where he and his company think the market is at the moment. position and determine the most appropriate indicators for use. Find out if the altcoin season is actually available or not.
Cointelegraph: A number of analysts say we are in the altcoin season, or at least close to a season. Some people look at support / resistance fluctuations and fractals on the market value charts of alternative currencies (isolated from the market value of Bitcoin) to make a convincing case. Why do you think we are not approaching the altcoin season?
Ben Lili: I think everyone interprets what defines the altcoin season differently. For many, the altcoin season may come when bitcoins and altcoins combine both. This is in contrast to the increase in bitcoins, while altcoins remain stable or fall.
I think this is a fair overview of the altcoin season, but it is not necessarily one of the seasons I am in. Simply because if this is the definition of the altcoin season, there is no good reason for me to move away from bitcoin and agreement with altcoins in terms of risk.
Because in this altcoin seasonal definition, bitcoin is still the preferred asset to own.
We think the altcoin season is about market movements that surprise people, or at least make traders think new about what is normal.
CT: So the altcoin seasons do not reflect a shift in macro level in the market direction for Bitcoin’s speed?
Bill Ling: Well, back to what I said earlier, support and resistance are useful ways to clarify. We can look at these areas, which in case of breach cause a rapid price movement. This is the action you want to take, provided you are on the right side. While anything that falls between these poles and the resistors can be considered “expected” or normal, that is, in a broad sense.
To see where this region is located, we can take a look at the Bitcoin dominance chart. This allows us to see what percentage of the Bitcoin market is. At the moment it is trading in a range, ie in the “expected” range. And since it has a downward trend, this is good for altcoins as Bitcoin recognizes some dominance over other currencies.
While many may call this an “alternative season”, I note that this type of activity tends to occur in a bull cycle because new money moves in it.
We have actually been trading this range of predictions since mid-2019, coinciding with the time when Bitcoin reached its lowest level and began to rally.
Bitcoin’s weekly market value dominance. Source: TradingView, Jarvis Labs.
Oddly enough, we recently jumped out of this area in late 2020, and when we did, Bitcoin fell completely. During this run, altcoins lost their value. In the same way that Brent Johnson described the theory of the dollar milkshake, Bitcoin consumed the liquidity of the market as it grew.
We have since returned to this range of expectations, also known as the normal market area.
Now, if the opposite happens, and we break this expected area down, it will in our opinion mean that altcoins are a resource to sit in, as they will generate significant returns compared to bitcoins. This is when everything gets wild.
CT: For many years, traders have identified shifts in dominance between BTC and altcoins as an important indicator at the start of the altcoin season. According to the theory, when Bitcoin’s price consolidates or is in a downward trend and its dominance falls below a certain percentage, altcoin takes advantage of Bitcoin’s limited range by moving higher. What do you think about this?
Bill Lange: As I explained earlier, it’s all about expectations. As soon as the market changes in light of the norm, it will be “altcoin season”.