Coin World News Report:
Although the cryptocurrency market has been volatile between downturns and consolidations, there are complex signals in the altcoin market amid the anticipation of the launch of spot ETH ETF. Many predict that the so-called “altcoin season” may not occur in this cycle due to the current market calm. However, two key indicators currently suggest otherwise.
Data highlights that a whale or large institution sold off a majority 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 issuer of the ETH ETF on May 23.
Additionally, the cryptocurrency market has been bearish since the approval of the spot ETH ETF. The SEC’s postponement of approving the issuer’s S-1 registration statement has raised concerns among investors, making them 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 ($4.54 million), 269,177 UNI ($2.41 million), and 250,969 FXS ($708,000). However, the whale made profits exceeding $7.29 million through ETH. The net profit was $2.87 million. Despite the loss of $4.33 million due to price drops, the whale still holds around 3.33 million LDO ($5.83 million) and 31,191 AAVE ($2.8 million).
Expectations for the “Altcoin Season”
The whale’s actions align with the sentiment of some traders who predicted that most altcoins had reached their peak in this cycle during the rebound period of the cryptocurrency market from March to early April. Many traders expected a “altcoin season” similar to the bull market cycle of 2020/2021, where several altcoins (mainly Ethereum-based) would reach new highs after Bitcoin stabilizes.
However, due to some changes in the market, the current cycle appears to be following a new trajectory, with the most notable being the launch of Bitcoin ETF.
For example, 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.
There are significantly more “utility” tokens in the market currently compared to 2021, and new high-quality tokens are being added every week. The total market value has increased, and everyone seems excited. But ask yourself who will buy all these tokens. Unless institutions or retailers intervene collectively, 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, primarily for two reasons.
Firstly, although fear, uncertainty, and doubt (FUD) have recently saturated the market, data suggests that most altcoins are in the buy zone, with their market value to realized value (MVRV) ratios at relatively low levels.
The following 30-day MVRV chart shows some altcoins (mostly Ethereum-based) with ratios indicating that the average loss for addresses buying them in the past 30 days ranges from 5% to 18%. This is often interpreted as a sign of a potential bullish reversal.
Secondly, investors expect the launch of 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 temporary rise of several altcoins when the SEC approved the issuer’s 19b-4 request demonstrated this. On the other hand, the performance of the spot ETH ETF may not meet the expectations of the analysis, which could have adverse effects on several Ethereum-related altcoins.
