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Altcoin Trading Volume Shoots Up: Is The Altseason Upon Us Again?
TL;DR
Altcoin trading volume has surged above its yearly average, sparking discussions about a potential altseason. Recent data indicates a significant increase in trading activity for altcoins outside the top 5 cryptocurrencies.
Key points
- Altcoin trading volume has increased significantly.
- The 30-day moving average has surpassed the 365-day average.
- Discussions about the start of an altseason are gaining momentum.
Following the recent uptick in altcoin prices, conversations about the potential start of an altseason are gaining significant momentum. Interestingly, recent on-chain data about the rising altcoin trading volume has added some weight to the altseason discussions.
Altcoin Trading Volume Climbs Above Yearly Average
In a recent Quicktake post on the CryptoQuant platform, CryptoOnchain revealed a critical change in the altcoin market. Citing the “CEX Volume Ratio: Others vs Top 5” metric, the market analyst explained that the altcoin trading volume has been in an uptrend lately.
The “CEX Volume Ratio: Others vs Top 5” metric tracks how much trading volume is flowing into altcoins outside the top 5, relative to the combined volume of the top 5 assets. As such, it plays a key role in identifying the extent of capital rotation and whether altcoins have started to gain strength.
According to CryptoOnchain, the 30-day moving average of altcoin trading volume has now climbed past its 365-day moving average. This trend, explained the analyst, shows that the volume of this sub-asset class is steadily increasing.
Higher readings in the CEX Volume Ratio: Others vs. Top 5 are telltale signs that traders are leaning towards smaller altcoins rather than into major cryptocurrencies (Bitcoin, Ethereum, Solana, XRP, and BNB). This, in turn, is interpreted as growing risk appetite, which could positively influence an altcoin rally.
The market analyst cited historical data, noting that instances where the signals flashed mostly reflected short-term volume growth relative to the long-term baseline. These cases have also signaled “clear rotation of capital from major caps into mid and low-cap altcoins.”
For example, during the 2021 bull cycle, repeated clusters of these signals coincided with explosive rallies across the altcoins’ sector, alongside a major price appreciation in Ethereum.
Source: CryptoQuant
Notably, the chart shared by CryptoOnchain shows the purple “Volume Ratio” line gradually strengthening again after a period of weakness. The analyst noted that a breakout in the ratio could precede high-volatility periods, potentially increasing the likelihood of an altcoin market rally.
Q&A
What does the recent increase in altcoin trading volume indicate?
The increase suggests a potential shift towards altcoins, indicating that they may be gaining strength and possibly signaling the start of an altseason.
How does the 'CEX Volume Ratio: Others vs Top 5' metric work?
This metric tracks the trading volume of altcoins outside the top 5 compared to the combined volume of those top assets, helping to identify capital rotation in the market.
What is the significance of the 30-day moving average surpassing the 365-day moving average for altcoins?
It indicates a steady increase in altcoin trading volume, suggesting growing investor interest and potential market momentum.
