By Nancy Lubale
Compiled by: Deng Tong, Golden Finance
The altcoin market has been trending downward for the past two weeks, but a key indicator suggests the recent decline could signal a “relative momentum bottom” and if history repeats itself, a “coordinated takeoff” could soon follow, according to cryptocurrency analysts.
Jamie Coutts, chief cryptocurrency analyst at Real Vision, said the top 200 equal-weighted index of cryptocurrencies “remains in a downtrend, but the altcoin seasonality indicator suggests the recent 10% drop is likely a relative momentum bottom.”
The Crypto Top 200 Equal Weight Index is an equal-weighted index designed to track the performance of the top 200 cryptocurrencies by market cap relative to Bitcoin.
Coutts shared the chart below, showing that the index has been trending downward, with the Altcoin Seasonal Indicator reaching a 10% low. This means that “only 10% of the top 200 outperformed BTC on a 90-day lookback,” the analyst explained.
Historically, this has marked a market bottom, followed by a sustained rally in altcoins.
“Altcoins may still fluctuate around these levels for a while before we see a coordinated takeoff, with many already starting to build nice bases.”
Equal weighted index of top 200 cryptocurrencies vs. daily active users vs. altseason indicators. Source: Jamie Coutts
Coutts also considered another metric across the cryptocurrency market — the number of daily active users (DAU) — to support his predictions on where the altcoin market is headed.
DAU is a metric that reflects the number of unique public addresses that conduct transactions on a blockchain every day.
Coutts noted that the number of DAUs across all blockchains has grown 97% so far this year, indicating that “growth continues unabated.”
More users means more user fees, which means "increase in asset prices," he said.
“I think some altcoins are ready for round two,” Moustache, a well-known cryptocurrency analyst, said in a July 15 article, adding that the launch of the much-anticipated spot Ethereum ETF could provide the needed momentum.
In a previous post, Moustache shared the following chart, showing that altcoin market capitalization is repeating a similar trend to 2020 before embarking on “the strongest wave of the bull run.”
Source: Moustache
It’s still Bitcoin season
The Bitcoin dominance chart, which measures BTC’s market share relative to the entire cryptocurrency market, is one of the indicators commonly used to indicate whether the altcoin season has begun. It can provide traders with an overview of investor sentiment and risk appetite in the market.
The metric has been trending upward since the beginning of 2024, reaching a three-year high of 56.5% on April 13. As of the time of publication, BTC dominance is 54%, indicating that it is still Bitcoin season.
Bitcoin market dominance. Source: TradingView
This means that altcoins are still underperforming Bitcoin.
According to Blockchain Central, only 37% of the top 50 altcoins have outperformed BTC in the past three months. While this is a positive sign, it is still not enough to declare an altcoin season. To declare an altcoin season, this percentage must exceed 75%.
Altcoin Seasonal Index. Source: Blockchain Center
This means that while signs of an altcoin season are starting to coalesce, it may be too early to make a judgement call.
