Bitcoin News Today: Altcoin Season Begins as Ether Gains 23.3%

Bitcoin recently reached a series of new record highs, peaking just below $124,000 before profit-taking set in. This surge has paved the way for what many are calling the latest "altcoin season," where cryptocurrencies other than bitcoin experience significant gains.

The recent bitcoin bull market has primarily been driven by institutional interest in spot bitcoin ETFs and BTC-based treasuries, leaving altcoins in the background. However, this week has seen a shift as several altcoins have posted gains ranging from 50% to 80%, with capital flowing from bitcoin to more speculative investments.

Ether, for instance, saw a 23.3% increase this week, outperforming bitcoin's 9.3% gain. Other layer-1 blockchains like SEI and SUI also performed well, with SEI rising by 41% and SUI by 36%. This shift suggests a more targeted and project-focused altcoin season, rather than the speculative and viral moves often led by influencers and celebrities in previous cycles.

Data from CryptoQuant supports this trend, with their MVRV-based altcoin season indicator showing consecutive weeks of altcoin momentum for the first time since June 2024. This indicator measures the market value relative to BTC and ETH, and during previous bullish cycles, it remained in an altcoin season for extended periods.

Additionally, the meme coin dominance chart has been on a significant downtrend since the start of the year, following the issuance of botched meme coins by U.S. President Donald Trump and First Lady Melania Trump. This shift away from meme coins suggests that this period of the cycle may be characterized by tokens tied to projects with merit rising, rather than speculative highs and euphoria.

Further evidence of an altcoin season comes from the CD20 index, which includes more altcoins and has outperformed the CD5 index. The CD5 index considers only BTC, ETH, XRP, SOL, and ADA. CoinMarketCap's altcoin season barometer has also risen to 36 out of 100, a level seen just once in the past 90 days.

However, the altcoin market remains heavily reliant on bitcoin. If bitcoin continues to consolidate above its prior record high of $112,000, altcoins are poised for further gains. Conversely, if bitcoin continues its ascent into uncharted territories or breaks below $112,000, the altcoin market may underperform against BTC. This is because altcoins lack sufficient liquidity to handle major price swings, and capital may be redirected to chasing bitcoin's rally, leaving altcoins behind.