The cryptocurrency market is showing signs of an impending altcoin season, a period characterized by a surge in the price of other assets relative to Bitcoin. Market participants often shift their focus and capital toward altcoins during this period.

A number of key indicators are beginning to point to this gradual shift in market dynamics. This analysis delves into some of these factors.

Altcoin Season May Be Underway

One such indicator is the increasing trend in TOTAL3, a metric that tracks the total market capitalization of all cryptocurrencies, excluding Bitcoin and Ethereum. As of this writing, it stands at $933 billion, surging by 35% since the beginning of the month. For context, the market capitalization of this group of assets has added $212 billion over the past 22 days. 

As TOTAL3 approaches its all-time high of $1.13 trillion, it suggests that investors are allocating more capital to altcoins. Notably, the uptick in TOTAL3 comes during a period of consolidation in Bitcoin’s dominance (BTC.D).

Readings from its daily chart show that the BTC.D has oscillated between 61% and 58% since November 8. As of this writing, BTC.D stands at 59.30%.

When TOTAL3 spikes while BTC.D consolidates, it’s a significant indicator of a potential altcoin season. This means that investors are shifting their focus from Bitcoin to other cryptocurrencies, leading to increased demand and potentially higher prices for altcoins.

Moreover, in a new report, on-chain data provider CryptoQuant has noted an uptick in the values of several Layer 1 altcoins since the conclusion of the US presidential elections, confirming that a potential altcoin season might be underway.

“Cryptocurrencies like XRP, TRX (TRON), TON, ADA, and SOL have seen their prices increase sharply on expectations that the new US administration will be more pro-crypto,” CryptoQuant stated.

Furthermore, CryptoQuant explains that a spike in spot trading volume has accompanied this price surge.

“Daily spot trading volume for altcoins increased after the US presidential election and spiked as high as $18 billion on November 11, the highest since early August. Prior to this, altcoin spot trading volume had remained muted since May.”

The Altcoins May Need Some More Time 

While readings from the indicators mentioned above suggest a likely altcoin season in the near term, it is key to note that this will be confirmed when at least 75% of the top 50 altcoins outperform Bitcoin over a three-month period. 

However, data from Blockchain Center reveals that only 43% of these top altcoins have surpassed Bitcoin’s performance in the past 90 days — well below the 75% threshold required to declare an altcoin season officially.

The US Securities and Exchange Commission (SEC) achieved $8.2 billion in financial remedies during its 2024 fiscal year, marking a significant milestone despite fewer enforcement actions.

The agency reported that it filed 583 cases this year, reflecting a 26% decrease compared to 2023. However, substantial financial penalties, particularly from high-profile cases like Terraform, drove remedies to record levels.

Terraform Labs Responsible for 56% of SEC’s Enforcement Penalties

The SEC’s enforcement report highlighted that the $4.5 billion penalty from Terraform Labs made up 56% of the year’s total financial remedies. This case, tied to the 2022 Terra/Luna collapse, resulted in the largest monetary judgment ever secured by the SEC after a trial.

Terraform Labs and its CEO, Do Kwon, were found liable for defrauding investors during the Terra/Luna collapse in 2022. The SEC described the incident as one of the most significant securities fraud cases in its history. The collapse, which destabilized the crypto market, resulted in significant losses for investors, prompting heightened regulatory scrutiny.

Beyond Terraform, the SEC settled with crypto-friendly bank Silvergate Capital for misleading disclosures about its compliance programs related to crypto clients, including FTX. BarnBridge DAO also faced charges for failing to register its structured crypto assets as securities.

In addition to enforcement, the SEC highlighted its investor protection efforts. It distributed $345 million to harmed investors this year, bringing its total to over $2.7 billion since 2021.

The agency also processed 45,130 tips, complaints, and referrals in 2024, including 24,000 whistleblower submissions. Whistleblower awards reached $255 million, underscoring the SEC’s reliance on public collaboration to identify and penalize wrongdoing.

The outgoing SEC Chair Gary Gensler emphasized that these actions emphasizes the agency’s commitment to protecting investors.

“The Division of Enforcement is a steadfast cop on the beat, following the facts and the law wherever they lead to hold wrongdoers accountable,” Gensler added.

Despite the SEC’s achievements, critics have voiced concerns about its enforcement strategy. Miles Jennings, head of decentralization at a16z crypto, argued that large financial penalties might not address systemic issues in the financial markets.

“The SEC measures its success in the amount of fines collected from enforcement actions. While large fines can serve as a visible deterrent and provide a measurable benchmark for activity, they don’t reflect whether the SEC is achieving its core mission of preventing misconduct in financial markets,” he stated.

Stellar (XLM) has experienced a 50% price surge over the past 24 hours, making it the top-performing asset during this period. This surge can be attributed to the recent 10-K filing submitted by Grayscale Investments LLC for its Grayscale Stellar Lumens Trust.

At press time, the altcoin trades at $0.45, its highest price point since 2021. However, readings from its daily chart hint at a possible short-term decline. Here is how.

Stellar Lumens Trust Sees Spike in Net Assets

On Friday, Grayscale Investments LLC’s Grayscale Stellar Lumens Trust (XLM) submitted its 10-K filing for the fiscal year ended September 30, 2024. It noted that the trust recorded a 10% uptick in its overall net assets during the financial year considered. 

A 10-K filing is an annual report that publicly traded companies in the US are required to submit to the Securities and Exchange Commission (SEC). It provides an overview of the company’s financial performance. It includes the entity’s audited financial statements, business operations, risk factors, and management discussion and analysis.  

According to the report, the Grayscale Stellar Lumens Trust (XLM), an investment vehicle offering investors exposure to XLM, faced losses. This was due to the token’s price depreciation during the period considered and the fees paid to the trust’s sponsors. However, these losses were offset by the 34,875,230 XLM tokens valued at $3,923 added to the trust. This resulted in a net increase in the trust’s overall assets.

XLM Reacts To the News

The positive sentiment around this filing has resulted in a spike in XLM’s value. Over the past 24 hours, the token’s price has surged 58%, making it the market’s top gainer. As of this writing, the altcoin trades at $0.45, a price last observed in November 2021. 

However, readings from its daily chart suggest that this rally may not continue as XLM has become overbought among market participants. For example, its Relative Strength Index (RSI) is at an all-time high of  92.54 at press time. 

RSI measures an asset’s oversold and overbought market conditions. It ranges between 0 and 100, with values above 70 indicating that the asset is overbought and due for a correction. On the other hand, values below 30 suggest that the asset is oversold and may witness a rebound. XLM’s RSI reading of 92.54 suggests that it is significantly overbought and is at risk of a pullback. 

Furthermore, XLM’s price trades above the upper line of its Bollinger Bands indicator, confirming the likelihood of a price correction. 

The Bollinger Bands indicator measures market volatility and identifies potential buy and sell signals. It consists of three main components: the middle band, the upper band, and the lower band. 

When the price trades above the upper band, it suggests that the asset is overbought. This means that the asset’s price has moved significantly higher than its average price and is at risk of a pullback in the near term.

XLM Price Prediction: Token May Shed Recent Gains

Once buyer exhaustion sets in, XLM’s price is at risk of shedding some of its recent gains. According to its Fibonacci Retracement tool, if this happens, its price target will be the support level formed at $0.35. If the bulls fail to defend this level, the token’s price may drop further to $0.23. 

On the other hand, if buying pressure intensifies, the XLM token price will continue its uptrend and attempt to breach $0.52, a high it last reached in May 2021.