Binance Data Corroborates that “It’s Very Much an Altcoin Season” as Bitcoin Remains Stable

  • Bitcoin hasn’t moved for nearly a month now.
  • The world’s leading cryptocurrency is continuing its sideways trend, oscillating in a narrow range as its one-month realized volatility reached a 15-month low.

Meanwhile, implied volatility that measures the market’s expectation of future volatility has picked up a bit in the last couple of days, indicating market participants are expecting the volatility to return sooner.

The world’s leading cryptocurrency is currently trading at $9,165, with merely a $650 million recorded in ‘real’ trading volume, as per Messari.

Just like bitcoin, the volatility of US stocks also began to decrease last week, which marked the start of the earnings season. And this could be a reason why bitcoin’s volatility isn’t seeing an improvement as market participants wait and see how companies have been doing financially amidst the coronavirus pandemic. OKEx states in its market report,

“Historically, the stock market chooses the direction of the subsequent run two to three weeks after the start of the fiscal season.”

Bitcoin is being ignored in favor of altcoins

While the bitcoin market has no clear direction, open interest in the derivatives market is back at the mid-March level. OI for Bitcoin futures, reflecting the enthusiasm of market participants, has topped the $4 billion mark.

Meanwhile, the Bitcoin NVT Divergence Model is showing a “concerning lack of token circulation. Prices tend to move upward when unique token movement of an asset rises.”

The model draws a correlation between the BTC price and asset’s NVT, network value to transaction ratio.

And this is because bitcoin is being ignored in favor of altcoins.

For the past few weeks now, altcoins have been enjoying a bull ride. In the past month, Elrond Network jumped about 300%, Swipe 277%, Synthetix 261%, Aave 255%, TOMO 124%, Rune 96%, Chainlink 92%, Bancor and Compound 92%, VeChain 83%, Algorand 58%, Atom 53%, and Cardano 51%.

Changpeng Zhao, the co-founder and CEO of leading spot exchange Binance also noted that during Q2, from March 31st to June 31st, of the 200 coins listed on the platform, only three coins went down. CZ said in his interview with “Bloomberg Daybreak: Asia.”,

“Our data also shows that it is a very much an alt season right now, on Binance Futures more than 60 of the volume come from altcoins which is actually much higher than before.”

As for what’s fueling it is “anybody's guess,” there's several different factors even Tesla CEO Elon Musk tweeting about Dogecoin could be part of it, he said.

With so much fiat floating around, bitcoin’s time will come

While altcoins are currently ruling, bitcoin is stuck just above $9k after several failed attempts at $10,000. CZ said,

“With all the macroeconomic things that are happening with the amount of quantitative easing and the amount of fiat flowing into the economy, I think sooner or later it's going to break out but right now for the last little while bitcoin has been really stable.”

As we saw in 2020, Bitcoin has rather become increasingly correlated with SPX, which many argue puts its safe-haven status in question. But according to CZ, when a market so much bigger than crypto goes down and people lose their money,

“many of those people who have crypto investments will want to convert those investments into cash. So that it has a drag down effect when a large asset type is going down.”

“If you look at the longer time horizon with so much quantitative easing, with so much fiat floating around, I think the safe having properties of bitcoin will come through over time.”

Moreover, China's cryptocurrency ambitions will provide exposure to bitcoin and cryptos, which is “great for our industry,” because “regardless of how good the digital currency is issued by them, you don't get too many chances of educating 1.4 billion people,” said CZ.

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