After the recent rise in altcoin prices, more people are talking about whether an “altseason” might be starting. Interestingly, new on-chain data showing higher altcoin trading volume is adding weight to these discussions.
Altcoin Trading Volume Rises Above Yearly Average
In a recent post on the CryptoQuant platform, analyst CryptoOnchain pointed out a key change in the altcoin market. Using the “CEX Volume Ratio: Others vs Top 5” metric, they explained that altcoin trading volume has been trending upward lately.
This metric tracks how much trading volume is going into altcoins outside the top 5, compared to the combined volume of the top 5 assets. It’s useful for spotting capital rotation and whether altcoins are starting to gain strength.
According to CryptoOnchain, the 30-day moving average of altcoin trading volume has now moved above its 365-day moving average. This trend shows that trading volume for these smaller assets is steadily increasing.
Higher readings in the CEX Volume Ratio: Others vs Top 5 suggest that traders are focusing more on smaller altcoins rather than major cryptocurrencies like Bitcoin, Ethereum, Solana, XRP, and BNB. This is seen as a sign of growing risk appetite, which could help fuel an altcoin rally.
The analyst looked at historical data and noted that similar signals in the past mostly reflected short-term volume growth compared to the long-term average. These signals also indicated “clear rotation of capital from major caps into mid and low-cap altcoins.” For example, during the 2021 bull run, repeated clusters of these signals coincided with big rallies in altcoins and a major price increase in Ethereum.
The chart shared by CryptoOnchain shows the purple “Volume Ratio” line gradually strengthening again after a weak period. The analyst said that a breakout in this ratio could lead to high-volatility periods, which might increase the chances of an altcoin market rally.
Ethereum Stability Could Confirm an Imminent Altcoin Rally
CryptoOnchain also explained that the rise in altcoin trading volume could mean “retail and institutional interest is expanding beyond the top 5 assets.” However, this doesn’t automatically mean good news for the altcoin market. According to the analyst, confirmation from Ethereum’s price action might be needed to understand the market’s true dynamics.
CryptoOnchain said: “If this momentum continues and is paired with a stable or rising ETH price, it could be strong confirmation that a broader altcoin rally is underway.”
As of now, Ethereum is trading at $2,329, up 1% in the last 24 hours, according to CoinGecko data.
Featured image from Shutterstock, chart from TradingView.
Frequently Asked Questions
Here is a list of FAQs about the recent surge in altcoin trading volume and whether altseason is back
BeginnerLevel Questions
1 What exactly is altseason
Altseason is a period in the crypto market where alternative cryptocurrencies significantly outperform Bitcoin in terms of price percentage gains It usually involves a broad rally across many coins not just one or two
2 Why is altcoin trading volume surging right now
Several factors can cause this excitement about new projects anticipation of a Bitcoin ETF approval spilling over or traders rotating profits from Bitcoin into smaller coins hoping for bigger quicker returns
3 Does a surge in trading volume automatically mean altseason has started
Not necessarily High volume can also mean a lot of selling or a shortterm hype cycle True altseason is confirmed when most altcoins are rising in price steadily over weeks not just seeing a spike in trading activity for a few days
4 How is altseason different from a regular crypto bull run
A bull run usually starts with Bitcoin leading the charge Altseason is a specific phase within a bull run where the spotlight shifts away from Bitcoin and Ethereum to smaller riskier coins that can make dramatic gains
5 Is it a good idea to buy altcoins now if Im new to crypto
Proceed with caution Altcoins are much more volatile than Bitcoin If you are new its risky to chase the surge A safer approach is to stick with established coins first and only invest a small portion you can afford to lose in altcoins
AdvancedLevel Questions
6 How can I tell if the current volume surge is organic or manipulated
Look for discrepancies between volume on centralized exchanges vs decentralized exchanges Also check if the volume is concentrated on a few shady exchanges or spread across reputable ones A sudden massive volume spike with no clear news catalyst is a red flag for wash trading
7 What metrics should I track to confirm a true altseason vs a fakeout
Track the