Altcoin Season Index forms an inverse head and shoulders pattern over 3.5 years.
The pattern suggests a potential breakout favoring altcoins in the coming weeks and months.
The index currently sits around 41, indicating a shift towards altcoin dominance.
The Altcoin Season Index displays a 3.5-year inverse head and shoulders pattern, a well-known technical analysis indicator that often signals a bullish reversal.
This pattern is forming between 2022 and 2024, with the head appearing at its lowest point in 2022 and the shoulders taking shape around late 2023.Â
https://twitter.com/el_crypto_prof/status/1842980507291955548
The index, which tracks the relative performance of altcoins against Bitcoin, is currently positioned at a value of 41. This value represents a transition point in the ongoing cyclical battle between Bitcoin dominance and altcoin strength.
Historically, such values have been associated with market transitions, and the current formation points toward a period of altcoin outperformance.
Over the past few years, the index has moved between phases labeled as Bitcoin Year and Altcoin Year.Â
These phases reflect periods when one asset class outperforms the other. The chart's inverse head and shoulders pattern hints that the market could be on the verge of moving into an Altcoin Year as the pattern approaches its breakout point, which could occur in the weeks and months ahead.
Source: el_crypto_prof
If the pattern holds, the next phase of the market could see altcoins gaining momentum. This potential shift would come as the altcoin sector appears to be at a critical juncture, with many expecting heightened market activity during the upcoming period.
As the index moves closer to breaking the neckline, which sits in the mid-30s, traders and investors watch closely for confirmation.
This technical development is being monitored across the cryptocurrency market, as the outcome could significantly influence capital flows between Bitcoin and altcoins.
If confirmed, the breakout may lead to a sustained period of altcoin dominance, similar to previous cycles observed on the Altcoin Season Index.