The alternate season of 2017 was a prop of Bitcoin’s running of the bulls. Once the price of Bitcoin rallied around a new ATH, investment started pouring in for altcoin projects. This means that there was not a lot of independence in altcoin rallies. Also, short term highs in BTC were followed by rallies of altcoins. Investments in and out more quickly, in altcoins. However, in 2021 that has changed.
Top altcoin Ethereum had led the way with the launch of ETH 2.0. The rise in prices to $ 1,300 favors growing market capitalization and high Open Interest in ETH futures. Which drives the rally, led by Ethereum. Most of the altcoins in the top 10 show double-digit payouts. Altcoins like Stellar Lumens and Cardano are showing double-digit gains, mostly independent of Bitcoin’s price rise and timing. During the last two quarters of 2020, the correlation of altcoins with Bitcoin has fallen. However, the price increase continues for the most part.
Correlation of the best atlcoins with BTC
This alternate season, DeFi projects have made great strides, with a high retail investment of around 30.17k BTC. Although DeFi’s TVL in Bitcoin has fallen, the gain from DeFi projects is not related to the rise in Bitcoin prices. The gains displayed by top altcoin projects have changed the portfolio of retail traders. Bitcoin’s dominance rises to 68% and it is likely to reach 70% in the future, if not more. The growing dominance of Bitcoin poses a threat to the investment flow of altcoins. Before that happens, the alternate season may come to an abrupt end. The correlation of the best altcoins with Bitcoin has dropped since the Bitcoin price rally. The correlation of the last seven days can be seen below.
Correlation of the best altcoins with BTC || Source: Cryptowatch
The correlation of the top 10 altcoins with Bitcoin is much higher compared to others based on data from CoinMarketCap. There is an increase in correlation since the returns are higher. However, the current season is almost Bitcoin independent and that makes it different from 2017.
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