BiJie.com reported:
Despite the volatile nature of the cryptocurrency market, there have been mixed signals in the altcoin market as the launch of the spot ETH ETF approaches. Many have predicted that the so-called “altcoin season” may not occur this cycle due to the current market calm. However, two key indicators currently suggest otherwise.
Data reveals that a whale or large institution sold off a significant portion of altcoins last Wednesday. The whale spent $75 million to purchase ETH and several other Ethereum-related tokens. Prior to this, the SEC approved the 19b-4 application of the ETH ETF issuer on May 23.
Furthermore, since the approval of the spot ETH ETF, the cryptocurrency market has been in a bearish trend. The delay in the SEC’s approval of the issuer’s S-1 registration statement has raised concerns among investors, causing them to become overly cautious about potential bullish bets.
Altcoin Market Analysis
The whale incurred losses by selling 3.13 million LDO ($5.77 million), 49,771 AAVE tokens ($4.54 million), 269,177 UNI tokens ($2.41 million), and 250,969 FXS tokens ($708,000). However, the whale made profits surpassing $7.29 million through ETH, resulting in a net profit of $2.87 million. Despite incurring losses of $4.33 million due to price declines, the whale still holds approximately 3.33 million LDO ($5.83 million) and 31,191 AAVE tokens ($2.80 million).
Expectations for the “Altcoin Season”
The whale’s actions align with the sentiments of some traders who predict that most altcoins have already reached their peak this cycle during the rebound period of the crypto market from March to early April. Many traders anticipate the occurrence of an “altcoin season” similar to the bull market cycle of 2020/2021, during which several altcoins, primarily Ethereum-based, reached new highs after Bitcoin stabilized.
However, due to certain market changes, the current cycle appears to be following a new trajectory, with the most notable being the launch of a Bitcoin ETF.
For instance, in the previous cycle, most activity occurred in ETH and Ethereum-based DeFi tokens. But now, there are approximately 300 decent projects. There isn’t enough liquidity for all of them to grow.
Currently, there are significantly more “utility” tokens in the market compared to 2021, and new high-quality tokens are being added every week. The total market capitalization is increasing, and everyone seems pleased. But ask yourself who will be buying all these tokens. Unless institutions or retailers collectively intervene, it will just be an eternal PvP battle.
Positive Indicators for Altcoins
Despite the uncertainty, the arguments supporting the “altcoin season” may still hold true for two main reasons.
Firstly, although fear, uncertainty, and doubt (FUD) have saturated the market recently, data indicates that most altcoins are in the buying zone, with their market value to realized value (MVRV) ratios at lower levels.
The following 30-day MVRV chart shows several altcoins, primarily Ethereum-based, with ratios indicating that the addresses that bought them in the past 30 days have experienced average losses ranging from 5% to 18%. This is often interpreted as a sign of a potential bullish reversal.
Secondly, investors anticipate the listing of the spot ETH ETF before the end of July. Inflows into these ETFs could trigger a rebound in Ethereum, which is highly correlated with several altcoins in its ecosystem. The brief surge in several altcoins when the SEC approved the issuer’s 19b-4 request serves as evidence for this. On the other hand, the performance of the spot ETH ETF may not meet the expectations of analysts, which could have a detrimental impact on several Ethereum-related altcoins.