Is it cottage-coin season yet? Glassnode data tells you the answer.

Below is the information on whether or not the current VC season is underway, as shown by the “VC Season Indicator” from Glassnode, an on-chain analytics company.

Altseason Indicator on the Season of the Cottage Coin

In its latest weekly report, Glassnode discusses the recent state of cottage season in the cryptocurrency market. In order to check if the “cottage season” is on, the analyst firm has designed the Altseason indicator.Bitcoin Miner

The indicator, which determines whether investors are in risk-averse mode based on the sector’s capital rotation, checks for two conditions.

First, the Altseason indicator looks at net capital flows in the industry’s three major asset classes: bitcoin (BTC), ethereum (ETH) and stablecoins.

For the first two assets, net flows are measured using their “realized caps”. The Realized Cap is a capitalization model that calculates the total valuation of any asset by assuming that the real value of any token in circulation is the price of its last move rather than the current spot price.

The last transfer of any token may be the last point at which it changed hands, so the price at the time of the transaction will be its current cost basis. Thus, the realized cap summarizes the cost basis of each holder in the industry.Bitmain Miner

In other words, the realized cap measures the actual amount of capital invested in the asset by the investor. Changes in the metric will therefore reflect the amount of capital flowing into or out of the asset.

For stablecoins, net flows can be judged based on supply only or market capitalization, as the value of the stablecoin stays pegged to $1 at each point, so the market capitalization and the realized cap will be equal in amount (in addition to the units, both of which will be equal to the supply).

In order for the cottage coin season to be active, all three asset classes should have positive net flows. This is because capital typically enters the cryptocurrency space through these tokens before shifting to cottage coins as investor risk appetite rises.

Another condition checked by the Walled Coin Season indicator is the momentum of the Walled Coin market capitalization itself. In particular, the indicator confirms whether the market capitalization of the cottagecoin is currently above its 30-day simple moving average (SMA).

Altseason Indicator data over the last few years|Source: Glassnode’s The Week Onchain – Week 8 2024

The chart shows that the Altseason indicator first started flashing risk signals in October of last year. However, the signal disappeared when the market cooled after the launch of the Bitcoin Spot ETF.

However, after a 22-day pause this month, the Altseason indicator seems to indicate that the Altseason is back.