International Finance

IF Insights: Is cryptocurrency market going to witness potential Altcoin season?

Market observers are closely monitoring several significant signs that may signal the start of cryptocurrency's rise

Experts and fans in the cryptocurrency space have been speculating about the possible start of an “alt season” in light of Bitcoin’s (BTC) recent jump to a record high of USD 73,750 and subsequent decline to USD 61,000.

Bitcoin has historically sparked market cycles with strong jumps, but the real action usually happens when the market is consolidating and other cryptocurrencies are leading the way. Several variables promoting wider use and raising the value of digital currencies are expected to make this pattern more noticeable.

The possibilities of an altcoin rally, which has the potential to change the dynamics of the cryptocurrency market drastically, are mostly due to the integration of decentralised financing (DeFi), improvements in blockchain scalability, and the growing application of smart contracts.

As per TradingView data, the aggregate market capitalisation of altcoins is presently over USD 1.16 trillion, indicating a 15% surge in the last two weeks. This increase is getting close to the resistance levels seen in mid-March when the market capitalisation exceeded USD 1.2 trillion.

Indicators To Watch Out For

Market observers are closely monitoring several significant signs that may signal the start of cryptocurrency’s rise.

The first is the 20-day exponential moving average (EMA), which highlights recent price movements and is essential for predicting future rallies. A bullish crossover in the EMA20 of the entire crypto market capitalisation indicates that a rally may be on the horizon.

The stochastic RSI, which evaluates the relative strength indicator’s (RSI) strength and weakness over a predetermined period, is another important indicator. This metric’s bullish crossing implies that altcoins may be preparing for notable price swings.

The anonymous cryptocurrency trader Titan of Crypto claims that a “rally time” may occur if the total market capitalisation of all cryptocurrencies “retests” the EMA20 and simultaneously “crosses bullish” on the stochastic RSI.

Additionally, the market share of Bitcoin, which is based on its dominance, provides details about investors’ attitudes and risk tolerance in general.

Based on past trends, alternate seasons typically exhibit a particular pattern of liquidity movement. Before it reaches the market, it usually goes through multiple stages.

A robust bull market fuels Bitcoin’s expansion during this period, which could see the cryptocurrency reach new all-time highs. At the same time, the popularity of Bitcoin starts to decline, suggesting a possible move toward altcoins.

Ethereum’s Turn: When Bitcoin corrects, Ethereum frequently takes the lead and shows remarkable gains. The upward trend in Ethereum might align with a period of consolidation in Bitcoin.

Big-Cap Altcoins Shine: During this stage, money and investor focus go to well-known altcoins, which causes a notable price increase.

Mid- and Low-Cap Frenzy: Mid- and low-cap cryptocurrencies with strong growth potential experience tremendous growth and more volatility at this stage.

At present, Bitcoin holds a 52.92% dominance. A drop in this number can indicate a change in investor sentiment about cryptocurrencies and could herald the arrival of an alt season.

This coincides with the overall altcoin market cap, which does not include the top ten cryptocurrencies, falling 17.55% to USD 266.47 billion in the last 30 days, according to TradingView statistics.

Trader Rekt Capital pointed out that even with the fall, the market is still above the USD 250 billion support level, indicating that it is preparing for a future upswing.

According to Van de Poppe’s study, the recent approval of the Ethereum ETF may catalyse for all seasons, in line with the market’s past trends. Ethereum’s growth and the confidence of investors may cause the altcoin market as a whole to appreciate more broadly.

He dug deep into his research to reevaluate the significance of retail confidence, which usually comes back when altcoins begin to gain traction, especially when Ethereum exhibits resilience.

One possible spark for an altcoin season is the approval of the Ethereum ETF. However, because of the listing procedure, it can take months for the full effect to manifest.

Developments in regulation have had a favourable impact on attitude in addition to market dynamics. The Fit21 law has had bipartisan support, and Trump’s embrace of cryptocurrency donations has improved the prospects for the market. Furthermore, Ethereum’s possible classification as a commodity is another development in regulation that is favourable.

And talking about Trump and cryptocurrency, the Republican presidential candidate now wants all remaining Bitcoin to be made in the United States. And the news comes at a time when the virtual currency industry is increasing its lobbying efforts in the American political circle as it faces heightened scrutiny from regulators, especially since bankruptcies at major crypto firms (with FTX being the prominent name) in 2022 spooked investors, exposed fraud and misconduct, and left millions of investors out of pocket.

Expert Forecasts And Market Attitudes

Divergent views exist among experts about the possibility of an alt season; some analysts believe the largest alt season might start and eventually achieve a USD 4 trillion market capitalisation.

Some analysts, like Benjamin Cowen, have pointed out that the state of the market right now does not point to the impending all-season, indicating that Bitcoin might continue to rule the markets for a little longer.

The Altcoin Season Index by Blockchain Centre, which identifies an altseason when 75% of the top 50 coins beat Bitcoin over the previous 90 days, reflects this opinion.

Merely 41% of the top 50 altcoins have outperformed Bitcoin in the past ninety days, according to the index. Given the optimistic outlook, the index’s reading of less than 75 indicates that cryptocurrency season has not yet officially begun, offering a more circumspect viewpoint.

Although there are encouraging indications of a forthcoming all-season, the nature of the cryptocurrency industry is still unclear.

Investors should continue to exercise caution and keep up with any changes or trends in the market. When constructing investment positions, it is essential to conduct in-depth research and analysis on cryptocurrency projects to optimise possible profits and efficiently mitigate risks.

Before the alt season picks up full steam, it can go through a consolidation phase. Numerous other cryptocurrencies, including XRP, Litecoin, Solana, and many more, are waiting in line to try their luck after the ETH ETF. The market appears to be more optimistic than ever about ETF adoption.

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