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Bitcoin Drops Sharply as Altcoins Hold Up Relatively, Glassnode Signal Shows

Glassnode sees a high altcoin score, but that is mostly because Bitcoin is dropping fast. Here’s why that does not necessarily mean a real altcoin season.

By Zenz van der Wielen
• 2 min read
Bitcoin Drops Sharply as Altcoins Hold Up Relatively, Glassnode Signal Shows

Key Takeaways

  • Glassnode’s Altcoin Cycle Signal rose to 86, which normally points to altcoin season.
  • The high score is mostly because Bitcoin is falling faster toward $63,600 than altcoins.
  • Altcoins are holding up relatively well, but the market is still bearish, according to the article.

The crypto market is showing a pretty unusual dynamic right now: Glassnode’s Altcoin Cycle Signal has climbed to 86, which would normally point to altcoin season, but in this case it is mostly the result of a sharp drop in Bitcoin. While Bitcoin is quickly sliding back toward $63,600 (€55,500), alternative coins (altcoins) seem to be holding up relatively well after nearly two years of falling prices.

Altcoin Cycle Signal Explained

The Altcoin Cycle Signal is a metric developed by Glassnode that analyzes the daily relative performance of Bitcoin versus the top 250 altcoins, excluding stablecoins. A reading above 50 points to altcoin season, where altcoins outperform Bitcoin, while a reading below 50 points to Bitcoin season. The current high reading of 86 suggests that altcoins are doing better than Bitcoin, but that is mainly because Bitcoin is dropping faster than altcoins.

Altcoins Hold Up Despite Bitcoin's Drop

Unlike a real altcoin season, where capital actively rotates into smaller tokens that are rising in price, the current setup is mostly a sign of weakness in Bitcoin. Altcoins have not started a rally, but they have stabilized because most of their selling pressure has already played out. Bitcoin is still carrying most of the market pressure, which shows that the market overall is bearish. So this relative strength in altcoins does not mean there is more demand for these tokens, but rather that Bitcoin is currently the weaker link.

Why This Matters for European Crypto Investors

For European crypto investors, this move could be interesting because it shows that market sentiment around Bitcoin is currently negative, which can affect the broader crypto market. The fact that altcoins are holding up relatively well could point to some stabilization in those segments, although it is important to understand that this is not a sign of an uptrend in altcoins themselves. Investors would do well to keep a close eye on Bitcoin, since this coin still plays a dominant role in the market backdrop. A similar shift in market dynamics was seen earlier when Bitcoin strengthened its dominance while altcoins lost ground.

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