Cryptocurrency's alternative coins on the brink? - The real altcoin boom yet to materialize
The European Union has recently called for stricter oversight of the cryptocurrency market, a move that comes as the altcoin season is in full swing.
The altcoin market, which now represents approximately 28% of the total crypto market, has been experiencing a surge in recent weeks. The Altcoin Season Index has surged to a cycle high of 80, indicating a strong altcoin rally.
Among the top 50 altcoins, Pudgy Penguins has performed the best over the last 90 days. Solana price is eyeing $250, but a key support is crucial for Q4 gains.
Interestingly, this altcoin rally is different from previous ones. Historically, alt rallies were accompanied by frothy sentiment, but this is missing in the current rally. The Fear and Greed Index during the current altcoin rally is showing no euphoria, marking a clear divergence from previous alt rallies.
Despite the lack of market froth, billions of dollars have flowed into the altcoin space in September, a month that is being referred to as 'altcoin season'. This influx of capital has been driven by speculative flows, with the altcoin rally primarily being driven by speculative rotations.
The speculative nature of the altcoin rally also means that altcoins are exposed to post-FOMC swings. The Federal Open Market Committee (FOMC) meetings can have a significant impact on the cryptocurrency market, and altcoins may be particularly sensitive to these movements.
Looking back at the last two altcoin seasons in 2024, the main actors were primarily prominent altcoin projects and exchanges such as Ethereum and Coinbase. During these periods, the Altcoin Season Index pushed close to 85, indicating extreme greed. However, during the current rally, the SOL/BTC ratio, which is a key indicator, has been nearly 30% lower, even with a full-blown 'alt season', signaling rotation without the usual market froth.
In conclusion, the European Union's call for stricter crypto oversight comes as the altcoin market experiences a strong rally. However, this rally is different from previous ones, with a lack of market froth and a focus on speculative rotations. As always, investors should exercise caution and carefully consider their investment strategies.
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