In light of the recent increase in altcoin prices, discussions regarding the possible onset of an altseason are becoming increasingly prominent. Recent on-chain data indicating an increase in altcoin trading volume has notably contributed to the ongoing discussions surrounding altseason. A recent post highlighted a significant shift in the altcoin market, as revealed. The market expert noted that the altcoin trading volume has shown an upward trend recently. The “CEX Volume Ratio: Others vs Top 5” metric assesses the trading volume directed towards altcoins beyond the top 5, in comparison to the total volume of the leading 5 assets.
Consequently, it is crucial in determining the degree of capital rotation and assessing if altcoins have begun to show signs of strength. As reported, the 30-day moving average of altcoin trading volume has surpassed its 365-day moving average. This trend indicates that the volume of this sub-asset class is steadily increasing. Increased levels in the CEX Volume Ratio: Others vs. Top 5 indicate a clear trend where traders are favoring smaller altcoins over the larger cryptocurrencies (Bitcoin, Ethereum, Solana, XRP, and BNB). This is seen as an increasing willingness to take on risk, which may have a favorable impact on an altcoin rally. The market analyst referenced historical data, indicating that occurrences when the signals activated predominantly indicated short-term volume growth in relation to the long-term baseline.
These cases have also indicated a distinct shift of capital from large-cap assets into mid and low-cap altcoins. For instance, throughout the 2021 bull cycle, consistent groupings of these signals aligned with significant rallies in the altcoin sector, in conjunction with a substantial price increase in Ethereum. It is important to highlight that the chart indicates a gradual strengthening of the purple “Volume Ratio” line following a phase of weakness. The observation indicated that a breakout in the ratio might signal upcoming high-volatility periods, thereby enhancing the chances of an altcoin market rally.
CryptoOnchain elaborated that the resurgence in altcoin trading volume may indicate that “retail and institutional interest is broadening beyond the top 5 assets.” However, this does not inherently indicate positive developments for the altcoin market. The crypto expert suggests that validation from Ethereum’s price movements may be essential to understand the underlying market dynamics.