[DigitalToday reporter Yoonseo Lee (이윤서)] Expectations for an altcoin season surged on social media earlier this month to the highest level in 3 months, but there is a view that the market structure remains unstable.
A recent rebound in altcoin prices has revived retail investor interest, but it is too early to call it a full rotation, as Ethereum has not regained leadership versus bitcoin, BeInCrypto reported on May 10.
On-chain analytics firm Santiment tallied a sharp rise in social media mentions related to “altcoin season” in early May. Mentions of “altcoinseason” hit 544 on May 4, the highest level since Feb. 5. Mentions of “altseason” also rose to the highest since March 18 as of May 5. The rise was attributed to growing expectations that funds may be moving from bitcoin to other cryptocurrencies as some altcoins posted notable gains.
Still, a price rebound alone is not enough to conclude an altcoin season. Which assets strengthen first matters in judging whether the market has entered a healthy rotation phase.
Analyst Altcoin Vector said structural problems are emerging in the current rally. The OTHERS/BTC ratio, which shows the performance of major altcoins excluding bitcoin, has shown signs of recovery, but the ETH/BTC ratio remains weak. “This divergence shows altcoins may be pricing in a potential rotation ahead of time,” Altcoin Vector said. “A healthy rotation usually starts with Ethereum,” it added.
An altcoin season is hard to judge simply by price rises in a few tokens. Typically, after bitcoin’s strength cools, funds move into Ethereum and large altcoins, then the momentum spreads to mid- and small-cap tokens. But with some altcoins rebounding first while Ethereum’s relative strength has not clearly recovered, analysts said signals for a market-wide rotation remain limited.
Bitcoin dominance and the ETH/BTC trend are also cited as variables that will determine whether an altcoin season emerges. If bitcoin’s strength persists while ETH/BTC weakness continues, the altcoin rebound could remain a short-term rotation. If Ethereum regains strength against bitcoin and trading value spreads to large altcoins, expectations for an altcoin season could gain support again.
The key is whether ETH/BTC can regain relative strength. Altcoin Vector said whether the current altcoin uptrend develops into a sustained rotation ultimately depends on Ethereum recovering strength versus bitcoin. If ETH/BTC weakness remains compressed, gains in smaller altcoins could be quickly reversed when bitcoin wobbles.
The current altcoin rally has clearly heated up investor sentiment, but the typical path of capital rotation has yet to be confirmed. Rather than concluding the market has entered an altcoin season based only on a surge in social media mentions and a price rebound, whether Ethereum regains leadership in the market is expected to be the next turning point.
