Geopolitical tensions continue to weigh heavily and while altcoins are bleeding, Bitcoin remains resilient and has bounced from highs above $105,000 serving as a support zone. As of June 23, the Altcoin Season Index has reached a two-year low at 14. This index tracks altcoin performance against Bitcoin and it has absolutely cratered. As a result, this reading almost always portends a very strong “Bitcoin season,” where Bitcoin’s gains far exceed those of altcoins.

The Altcoin Season Index operates on a scale from 0 to 100, measuring the prevalence of altcoin outperformance against Bitcoin. An “altcoin season” is when three quarters of the top 50 cryptocurrencies by market cap do better than Bitcoin. This trend continues for at least 90 days in a row. With the index languishing at 14, Bitcoin’s dominance is unchallenged.

This current market sentiment could not be more different from the conditions that typically lead to altcoin rallies. With extreme “Greed” levels at 75 and above typically indicating the beginning of an altcoin season, the Crypto Fear & Greed Index currently sits at 65, indicating that traders are in “Greed.” This indicates not just a strong overall crypto appetite, but an interest in the relative stability of Bitcoin amid broader market unknowns.

Decoding the Altcoin Season Index

The Altcoin Season Index is a temperature gauge for how altcoins are performing in relation to Bitcoin. An index value under 25 indicates a “Bitcoin season.” Unsurprisingly, altcoins burn out, while Bitcoin’s performance during this entire phase sets the pace. This dominance would suggest that traders have begun to favor Bitcoin first, perhaps drawn to its relative safety, but more likely due to its established market presence.

Since approximately mid-May, the crypto market has been playing out almost exclusively in a “Bitcoin season”. Bitcoin’s dominance has been increasing for a long time. This change in investor sentiment could be due to regulatory fears surrounding altcoins, or perhaps a preference for safety in periods of economic downturn. The Altcoin Season Index is at 14, highlighting how bad it still is for altcoins. They are still at a disadvantage and are failing to get momentum going in opposition to Bitcoin.

The index’s dependence on the first 50 cryptocurrencies based on market capitalization gives a wide view of the market. First, it’s important to realize that not all altcoins do equally well or poorly. Others will be able to enjoy profits regardless, even in a time of “Bitcoin season." Even so, the larger trend paints a picture of a difficult landscape for altcoins in general.

Market Dynamics and Bitcoin's Resilience

Bitcoin is now trading around $105,073, down 0.25% on the day at writing time. Even with the minor drop, the largest crypto asset proves to be a show of strength, remaining firm above the key support of $105K. This stability is particularly striking, given increasing geopolitical tensions bubbling up around us. Such tensions typically result in extreme market turbulence and heightened risk aversion.

If Bitcoin can consolidate above this support level, it is a positive indication of underlying demand and investor confidence. Yet altcoins are really struggling to get anything going. On the other hand, Bitcoin’s well-established reputation as a store of value and high degree of adoption contribute to keeping it relatively stable. This divergence serves as yet further confirmation of the stark difference in fortunes between Bitcoin and altcoins in the prevailing market environment.

Open Interest (OI) is the total number of outstanding derivative contracts. Over the past day, BTC, ETH and XRP have all seen a rise in OI. As you can see, increased activity and speculation are very present in these top 3 major cryptocurrencies. Traders would be more interested in profiting from short-term price fluctuations or protect against impending volatility. Alternatively, the increase in OI might be a sign of a return to demand for these assets as possible safe havens during times of market uncertainty.

The Road Ahead for Altcoins

As today’s “Bitcoin season” continues, the fate of altcoins’ longer-term prospects comes into play. Enter the altcoins Some of these alternatives will do well, due to their distinct use cases and technological advancements. The overall environment is still quite daunting. Bitcoin’s continued dominance reminds us that investors are first and foremost interested in safety. They’re investing in more proven assets rather than pursuing the higher-risk, higher-reward upside of altcoins.

For altcoins to have a second wind, a lot of things would have to fall into place. The tide is turning for investor sentiment in a big way. This move, propelled by increasing regulatory clarity, technology improvements and greater adoption, might just be what’s needed to further hype altcoins. As geopolitical tensions have eased, so too has that level of macroeconomic uncertainty. Such a change minimizes risk aversion, leading investors to seek out more diversified assets.

Until then, altcoin investors should take a more careful and tactical approach. Prioritize altcoins that have solid fundamentals and a real use case. Having an experienced and fully engaged development team will keep you on course through the current “Bitcoin season” and position you for success when the next opportunity arrives. As always, diversification and smart risk management are essential strategies in the highly volatile cryptocurrency market.