Altcoins are moving again, but ONE key metric says altseason isn’t here yet!

As the wider crypto market saw a boom, so did the altcoin market, with the latter’s market capitalization hitting $222 billion for the first time in 8 months.

However, while altcoins may be showing some signs of life, their rally still lacks the power needed to ignite a full-blown altseason.

Altcoin traders need to put in more work

According to Glassnode, despite this surge in market capitalization, altcoin leverage is reportedly still below a level that would historically be considered a major risk threshold.

In simple words, traders have not yet piled into altcoin futures positions to an extent typically associated with overheated markets. This can be concluded by the fact that the altcoin futures open interest relative to Bitcoin [BTC] was around -10% to -15% at press time, still below the red risk-threshold line near parity.

Historically, spikes towards or above that threshold have coincided with periods when altcoin leverage became stretched, increasing the risk of sharp liquidations.

However, with the metric below that level right now, the derivatives market may be relatively less crowded. This means that there may still be room for altcoins to attract more speculative capital before leverage reaches historically elevated levels.

Previous ATH and Bitcoin dominance stir the pot

This is also because the gap from previous all-time highs is significant. Bitcoin is still around 36% below its ATH. Ethereum [ETH] is still approximately 47% below its ATH.

Solana [SOL] remains around 61% below its ATH. And, as expected, the broader altcoin market capitalization is still around 54% below its ATH.

While the altcoin market has been struggling to gain momentum, Bitcoin’s dominance was still sitting at a healthy 59.19% at press time. This implied that Bitcoin still controls a majority of the crypto market’s total capitalization.

Is altcoin season incoming?

At the same time, the altcoin season index had a reading of 54 at press time, placing the market firmly between Bitcoin Season and Altcoin Season.

Unfortunately though, while the index has repeatedly climbed towards the 75+ zone, it has failed to sustain those levels for long. Hence, it’s been a while since a true altseason came by. In other words, while altcoins are gaining momentum, the market has not yet reached the breadth or consistency required for a confirmed altseason.

This was further confirmed by a recent report by AMBCrypto. It clearly highlighted that while altcoins may finally be breaking out after nearly two years of stagnation, a broad altseason is yet to arrive.

Final Summary

• Altcoin market cap’s surge and the altcoin season index hinted at an upcoming altcoin season.
• However, altcoin leverage lying still below a major risk threshold may be cause for concern.