Previous bull markets have typically been led by altcoins. Does this mean a more substantial altcoin rally is around the corner?

The price of bitcoin surged past the $60,000 mark on Wednesday for the first time since November 2021. The world’s largest digital asset by market cap has dominated the early part of the bull market rally, a time when altcoins typically show the strongest performance. However, altcoins have started to surge recently, so could this signify that we’re entering a new altcoin season?

Bitcoin stood at just under $62,000 on Saturday, within striking distance of its all-time high of just over $69,000 reached on Nov. 10, 2021. Bitcoin is up 22% over the past seven days, and 46% over the past 30 days, according to CoinGecko. Altcoins are simply “any coin that isn’t bitcoin,” a market led by ether (ETH), the native token of Ethereum. For its part, ETH recently went above $3,000 for the first time since April 2022 and sat at just over $3,400 on Saturday. It’s up 16% over the last seven days and 49% over the past 30 days. 

Read more: Is Ether Heading for $3,500?

“Ether has got substantial momentum behind it, breaching the $3,000 mark and gearing up for its highest weekly close in 97 weeks. This surge is fueling discussions about the potential onset of an ‘altcoin season’, a phase where alternative cryptocurrencies outshine bitcoin,” wrote a team of Bitfinex analysts in the latest weekly Bitfinex Alpha report.

Indeed, other altcoins have started to show stronger performance recently, including Solana (SOL), up 26% over the past seven days, Aptos (APT) up 30%, Shiba Inu (SHIB) up 45%, and Dogecoin (DOGE) up 62%, according to CoinGecko.  

The Bitfinex analysts noted that the recent stabilization of bitcoin dominance, or the market cap of bitcoin as a percentage of the market cap of all cryptocurrencies, at just above 51% could give way to a period of altcoin outperformance. “We believe the current similarity in dominance trends could see the onset of another period of surging altcoins in 2024 over the next few months,” said the report. 

How This Market Is Different 

The current bull market is unique in that the price of BTC has been driven steadily higher by the U.S. regulatory approval for the spot bitcoin exchange-traded funds (ETFs) and the subsequent massive inflows of investor money into those funds. And eight firms have already filed for potential approval of spot ether ETFs, helping drive the world’s second largest digital asset by market cap higher.

“The early innings of this bull market have been decisively driven by BTC. In previous bull markets it’s common to see alts move substantially higher in early parts of the cycle, however this time is different,” Matt Ballensweig, head of Go Network at institutional custodian BitGo, said in an email to Unchained. “Why? Because this rally is driven by real, organic net new institutional inflows.” 

Read more: Should You Sell Bitcoin Now That It’s Nearing Its All-Time High?

Ballensweig noted that the nine new spot bitcoin ETFs have been setting daily inflow records for the past few weeks. Excluding the Grayscale Bitcoin Trust, which was converted from an existing product into an ETF, the nine new spot bitcoin ETFs have $21.2 billion in assets under management.  On Thursday, BlackRock’s iShares Bitcoin ETF (IBIT) became the fastest ETF to reach $10 billion in assets, doing so in just seven weeks. 

“This goes to show that there are a plethora of new demand sources,” Ballensweig continued. “Trillion-dollar asset managers such as BlackRock and Fidelity are now recommending portfolios with crypto allocations — this is a huge deal as it pertains to the adoption of bitcoin by hedge funds, RIAs, pensions and endowments, a section of the market that was relatively dormant just a few months ago.” 

However, Ballensweig said the difference in what’s been driving bitcoin’s surge doesn’t mean altcoins will be shut out of the rally. 

“If you look at some of the classic retail-traded assets like DOGE, SHIB, SOL etc, they have underperformed BTC in the last couple of weeks; however, as we get into the later stages of this bull run, expect to see a wave of retail participation to pile on,” Ballensweig said. “You’re finally starting to see DOGE/USD get bid in size, indicating retail might be joining the parade as we speak.”

Not everyone agrees, however. Alex Thorn, head of firmwide research at Galaxy, told Unchained in a podcast this week that there’s often a dynamic where investors’ gains in bitcoin get rotated into altcoins, but that that’s not likely to happen when those gains are occurring in ETFs and there’s no easy way to rotate into other crypto investments.

“Many alt seasons have historically happened because the capital, [but] so much of it’s going to be stuck on these platforms where…[it] may be held by longer term investors such as advisor managed accounts, or on platforms where there is no way to rotate,” said Thorn. “And by the way, [the effect] will really dampen if ETH gets an ETF, too, because the two assets together, both market cap and narrative, cover most of the crypto narrative in the market.”