When will Altcoin Season Arrive?

📊 Quick Take

Another breakout tease. Bitcoin yet again battered itself against all-time highs, ticking $70k, then bleeding out to a low of $66k before eventually rebounding.

While fresh all-time highs remain out of reach for the majority of alts that existed during the peak of last cycle’s bull market, many tokens, including ETH and SOL, achieved new cycle highs today! How has Bitcoin’s rally to new highs and subsequent retreat impacted the broader market?

🧐 The Alpha

As has been par for the course, this morning’s sharp rally in Bitcoin was parasitic for alts, with the total crypto market cap drawing down by half a percent against BTC at its local top.

The decline relative alt strength sent ETH/BTC lower by 3% off its early morning highs, but the Ratio continues to demonstrate strength, holding above the key downtrend line that has been in place since September 2022.

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Just as many alts have yet to achieve record prices, the aggregate stablecoin supply is sitting nearly 25% below its all-time highs.

 Some are optimistic that stablecoin supply will further increase as America’s Federal Reserve cuts interest rates this year, making the high interest rates on stablecoins that come from demand for leverage increasingly attractive, but onchain yields are already highly elevated, above 5% for the first time since March 2022.

Yields can certainly increase should the demand for leverage continue to swell, but the presence of stretched yields already indicates that the market is highly levered to the long end.

Funding rates, which cooled significantly after Monday’s blow off top, have gotten slightly stretched for majors ETH and BTC at around 50% annualized, but remain within acceptable levels assuming crypto markets can maintain their upwards momentum trend.

As bulls celebrate new highs for crypto assets, Bitcoin’s rejection off the highs is providing a semblance of hope for beleaguered bears that the top may be in…

 📈 Chart of the Day

Stretched funding rates have allowed synthetic dollar stablecoin experimentation Ethena to become the third highest grossing crypto project by revenue, trailing only Ethereum and Tron.