he cryptocurrency markets have seen significant gains across the board in recent weeks, led by Bitcoin's ongoing climb to new yearly highs. While Bitcoin remains the dominant asset by market cap, altcoins have also joined in on the bullish momentum and are gaining relative to BTC.
This longer analysis will delve deeper into the technical and fundamental factors that suggest the emerging altcoin season may just be getting started.
Technical Drivers of Altcoin Strength
On the technical side, the total market cap of all altcoins excluding Bitcoin, known as "Total Altcap 2", gave a textbook breakout from a descending triangle pattern in November. As seen in the chart above, this breakout has now been followed by a retest and hold of the breakout level, adding confirmation to the bullish thesis. Traditionally, these technical breakouts in relative strength have been early indicators of emerging altcoin seasons.
The declining Bitcoin dominance chart further underscores how altcoins have been performing relatively well even as Bitcoin pushed to new highs.
Currently under 38%, Bitcoin dominance is at multi-month lows, a sign that investor interest is spreading beyond just Bitcoin into alternative cryptocurrency projects. As long as this downtrend in Bitcoin dominance remains intact, altcoins stand to continue benefiting.
Fundamental Factors at Play
Many argue that the current strength in both Bitcoin and altcoins reflects growing institutional adoption and acknowledgement of digital assets as a separate asset class. Pension funds, asset managers, and corporations allocating to crypto for the first time have tended to diversify into the larger altcoins like Ethereum that offer more use cases beyond just a store of value.
The emergence of blockchain interoperability solutions like Cosmos and Polkadot that enable communication across different networks have also opened the door for more institutional projects to deploy and build on various altcoin blockchains. This expanded utility and cross-chain activity provide fundamental tailwinds for altcoins.
Potential Altcoin Investment Opportunities
Based on both the continuing technical and fundamental factors, there appear to be several compelling altcoin investment opportunities to take advantage of the emerging momentum. Here are a few top candidates to consider:
Ethereum (ETH) - As a blue chip altcoin and infrastructure backbone for decentralized applications, ETH remains well-positioned to benefit from continued growth in the burgeoning Web3 space. With its upcomingMergeto proof-of-stake also eliminating the inflationary issuance tailwind.
Binance Coin (BNB) - As the native token of the largest centralized exchange by volume, BNB is effectively a play on continued growth of the entire cryptocurrency market. It also offers significant trading fee discounts, an attractive utility.
Celo (CELO) - An emerging smart contract platform focused on mobile accessibility and bringing defi to emerging markets. Its ongoing valve integration and mobile-first approach provide long-term potential.
ApeCoin (APE) - As the governance token behind the Bored Ape Yacht Club NFT collections and metaverse ventures, APE remains one of the more intriguing metaverse and community play opportunities.
Both technical and fundamental factors continue to point to meaningful upside potential for altcoins as the overall cryptocurrency market matures.
The emerging strength in alternative cryptocurrencies relative to Bitcoin suggests the current rally may just be the beginning of a full-fledged altcoin season. For long term focused investors, now may be an opportune time to start diversifying into some of the top smart contract and infrastructure platforms presented.