Author: Zoltan Vardai, CoinTelegraph; Translated by: Deng Tong, Golden Finance
Analyst: Altcoin bottoming could come in June
Popular cryptocurrency analyst Rekt Capital wrote in a May 8 article that based on historical chart patterns, altcoins could reach a price bottom around the beginning of June:
“Altcoins are following that plan perfectly. Altcoins bottomed in early February. Altcoins sold off during the Bitcoin halving. Altcoins will bottom in early summer.”
Altcoin hype cycle. Source: Rekt Capital
The altcoin market has been hit hard over the past month. The altcoin market capitalization excluding the top 10 cryptocurrencies fell more than 21% last month to $265 billion.
Altcoin market capitalization, source: TradingView
Despite the monthly plunge, altcoin market capitalization is still up more than 24% year to date (YTD) and more than 167% last year.
Historically, altcoin sentiment has been correlated with Bitcoin prices. Alex Onufriychuk, blockchain consultant and coach at QUBIC Labs Accelerator, said that altcoins may bottom out around June as U.S. spot Bitcoin exchange-traded funds (ETFs) see reduced inflows, market sentiment and Bitcoin prices remain depressed. He noted:
“It is possible that Bitcoin bottomed in June due to the lack of sufficient new liquidity in Bitcoin ETFs in the U.S. and Hong Kong. This suggests that the consolidation period may be extended.”
Nansen: Bitcoin breakout will trigger altcoin bull cycle
Aurelie Barthere, chief research analyst at Nansen, noted that despite seeing a potential local bottom, the altcoin bull run first requires Bitcoin price to break out to the upside:
“Altcoins are high-beta cryptocurrencies that succeed when market sentiment is very bullish. Crypto investor sentiment has been less than bullish since mid-March. With BTC price consolidating around the 20-day exponential moving average (EMA), we need to break above this and clearly resume BTC’s uptrend to outperform.”
BTC price has been making lower highs since mid-March. But many analysts believe this is a healthy consolidation period after the halving. Moreover, the chart suggests that a multi-month bull flag is forming that will set new all-time highs later this year.
BTC/USDT, 1-day chart. Source: Tradingview
QUBIC Labs’ Onufriychuk wrote that since altcoin sentiment is closely tied to Bitcoin price, finding a local bottom will not necessarily translate into an altcoin rally:
“Even if altcoins bottom out around June, it doesn’t necessarily mean a bull run will begin. Given the scarcity of new liquidity and heavy reliance on institutional reinvestment in new projects, more fundamental changes, such as increased retail and institutional investment and favorable regulatory developments, will be needed for a significant shift to occur.”
On the monthly chart, 10 of the 12 moving averages (MAs) are flashing buy signals for top altcoins like Ethereum.
Moving averages, altcoins. Source: TradingView
Altcoin prices could also rise as the M2 money supply turned positive year-over-year for the first time since November, suggesting that investors may soon start looking for opportunities to hedge against inflation or alternative investments.
The M2 money supply is an estimate of all cash and short-term bank deposits in the United States.
As the money supply of the world’s largest economy increases, some of that new supply will likely go into altcoins and memecoins, precipitating the start of an “altcoin season.”
