The market capitalization of all crypto assets in the global market combined have reached an all-time high above $883 billion.

The bull run has been primarily fueled by the strong momentum of Bitcoin and Ethereum. While many alternative cryptocurrencies lagged behind BTC, Ethereum has been one of the few trailing BTC’s uptrend.

Following the rally, the sentiment around the market remains mixed; some analysts say a local top has likely formed. Others believe an alternative cryptocurrency (altcoin) season is emerging.

If the price of Bitcoin sharply corrects, the probability of an altseason sharply decreases.

Altcoins typically rally when Bitcoin consolidates after a big rally. This pattern usually occurs because when BTC stabilizes, investors often look to take more risk-on plays in the crypto market.

Traders could long or short Bitcoin with leverage, but when there is low volatility, the funding rate could be burdensome.

The futures funding rate is a mechanism that exchanges employ to avoid the market from swaying steeply to buyers or sellers. Hence, if there are more buyers in the market, then buyers have to incentivize sellers through a funding fee every eight hours.

As such, when Bitcoin consolidates, the altcoin market tends to see an increase in volume.

Some traders believe Bitcoin could temporarily peak in the near future. A peak does not necessarily mean a deep correction has to occur. BTC could consolidate and demonstrate low volatility as it begins to prepare for its next run.

Michael van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said the probability of a temporary Bitcoin top is increasing. If this happens, altcoins would likely rally, the trader said:

“The likelihood of a temporary top is becoming significant at this point. #Bitcoin dropping down intraday after reaching the second target, while #Ethereum is bouncing upwards heavily in the $BTC pair. That’s great news for altcoins in general.”

Similarly, another trader known as “Altcoin Psycho” stated that history suggests a Bitcoin peak at the current levels is becoming more likely.

The “reversion clouds,” which is a momentum indicator that pinpoints key resistance and support areas, show BTC is nearing its ceiling. The trader explained:

“Tethered 90% of my crypto here. I have no idea what happens next. BUT, what I can say is the last time $BTC wicked above the reversion clouds was the 2018 top. Again, I have no idea what happens next. I am not shorting. But I am more than happy to tether profits here.”

However, there is a major variable that could decide whether an altseason prospers in the near term.

If Bitcoin begins to correct sharply without consolidating, altcoins could see intensified movements to the downside.

The post Crypto market cap reaches ATH of $883 billion—is an alt season coming? appeared first on CryptoSlate.

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