Altcoin Rally Widens, But Sustainability Concerns Linger

The altcoin rally has broadened to include a wider group of tokens, but there are concerns about its sustainability. According to CoinMarketCap's Altcoin Season Index, the 90-day reading reached 62 on September 27, still below the threshold for an altcoin season at 75.

A similar conclusion was drawn by Darkfrost's CryptoQuant analysis, which found that the share of Binance-listed altcoins below their 200-day moving average fell from around 80% in August to 13% in the latest reading. This indicates that more assets are participating in the recovery.

However, exchange deposit counts have risen, with weekly averages exceeding 22,700 on Binance, 8,300 on Coinbase, and around 32,000 across other exchanges. While this increase in liquidity can be seen as a positive sign, it also raises concerns about whether bids are deep enough to absorb potential selling activity without causing significant price impacts.

Additionally, futures exposure is rebuilding, with open interest rising while stablecoin supply expanded only gradually. Total stablecoin supply has increased by 0.54% over the past seven days and 0.9% over 30 days, but this growth is not yet indicative of a large new pool of capital entering the market.

The three signals to watch in the current rally are: breadth, which measures the performance of altcoins; supply, which looks at exchange deposit counts; and funding, which examines futures exposure. While these indicators suggest that the recovery is broader than initially thought, they do not necessarily confirm a full-fledged altcoin season.