With risk-off sentiment still hanging over the market, investors have been rotating capital into altcoins. Such a move has historically helped mitigate losses by spreading exposure, rather than putting all funds into one place.
The Altcoin Season Index has jumped back to levels we last saw in early January. This often signals the start of a broader rotation. At the time of writing, ETH/BTC was up 2.6% intraday, adding further weight to this setup.
On the flip side, Bitcoin dominance [BTC.D] posted three weekly lower lows and hasn’t been able to reclaim the 60% mark. In fact, the same is now down nearly 2.5%. Taken together, it might be a classic rotational setup, with altcoins gaining momentum as BTC cools off.
Source: TradingView (BTC.D)
That said, a full-blown altcoin season still looks way off.
The ETH/BTC ratio is sitting at a key inflection point. After the mid-January breakdown, it failed to hold 0.033 as support, triggering a correction. Back then, however, the altcoin season eventually kicked off.
That divergence showed investors were chasing hype-driven plays over projects with real utility. Now, with the Altcoin Season Index jumping and ETH/BTC chopping sideways, a similar dynamic might be forming.
Naturally, the big question – Are investors still favoring Bitcoin’s risk/reward over “high-cap” altcoins? If so, the ongoing weakness in BTC.D could be temporary, without triggering a meaningful rotation into altcoins.
Bitcoin dominance in inflows could signal on-chain power
On-chain metrics highlighted a clear shift in investor positioning.
The jump in the Altcoin Season Index, along with a range-bound ETH/BTC ratio, appeared to back AMBCrypto’s view that investors may be chasing yield through speculative plays rather than moving into blockchains during market FUD.
CryptoQuant data confirmed this trend – At press time, Bitcoin trading volumes on Binance had regained dominance, making up 36.8% of total exchange volume. In comparison, altcoins accounted for 35.3% and Ethereum 27.8%.
Source: CryptoQuant
Looking back, altcoins represented 59.2% of Binance trading volumes in November. By mid-February that share had fallen to 33.6%, marking almost a 50% drop in altcoin activity – A clear sign of capital rotating back into BTC.
All this on-chain data has simply reinforced AMBCrypto’s thesis.
Even with the recent altcoin jump, a full-blown alt season still looks unlikely. Investors are either chasing Bitcoin’s risk/reward or short-term speculative plays rather than Ethereum [ETH], keeping a broad altcoin rotation at bay.
Final Summary
- While Altcoin Season Index and ETH/BTC hinted at short-term activity, BTC dominance and inflows alluded to capital still flowing towards Bitcoin.
- On-chain metrics and trading volume shifts revealed investors chasing speculative plays rather than broad L1 adoption.