As Bitcoin ($BTC) nears the eagerly anticipated $100,000 milestone, market dynamics point to a possible shift towards altcoins. Analysts are watching for patterns that signal the start of altcoin season, a period when altcoins significantly outperform Bitcoin, diminishing its market dominance.
Historical context and major pattern
Tech Dev Analysis:
Cryptocurrency analyst TechDev has identified a recurring pattern associated with altcoin seasons. In both 2017 and the previous cycle, altcoin seasons were followed by three consecutive weekly closes above Bitcoin’s previous weekly high.
Current scenario:
Bitcoin is on track to close its third consecutive week above its previous weekly high by Sunday, November 24.
If the trend continues, altcoin season could start as soon as Monday, with increased activity in mid- to low-cap cryptocurrencies.
Understanding the Dynamics of the Altcoin Season
1. Declining Bitcoin Dominance:
During altcoin season, altcoins outperform Bitcoin, leading to a decrease in Bitcoin's market cap dominance.
2. Shift in capital flows:
Historically, capital has been rotated out of Bitcoin and into altcoins after major Bitcoin breakouts. This redistribution benefits cryptocurrencies with small market caps and a focus on interest.
3. Ethereum’s unique status:
Some analysts exclude Ethereum ($ETH) from altcoin analysis due to its large market size and unique role within the ecosystem.
Altcoins lead the charge
Several altcoins are already showing strong performance, which could signal the start of the altcoin season:
Solana ($SOL)
Ripple ($XRP)
Cardano ($ADA)
Algorand ($ALGO)
Hedera ($HBAR)
NEAR Protocol ($NEAR)
SUI Network ($SUI)
These projects have outpaced other ones in recent days, benefiting from the rotation of capital from Bitcoin and Ethereum to small, high-growth assets.
Key points for investors
1. Weekly closing monitoring:
Sunday's close may confirm the historical pattern, signaling the start of the altcoin season.
2. Focus on useful altcoins:
Projects with strong foundations and real-world applications may see the highest growth during this period.
3. Diversify strategically:
Reallocating capital towards promising mid- to low-end altcoins is an opportunity to capitalize on the expected trend.
Final Thoughts
The altcoin season presents an opportunity for crypto traders to capitalize on market cycles and exploit emerging altcoin trends. With historical patterns aligned, the coming week could mark a pivotal moment for the crypto market. Traders should remain vigilant, keep an eye on key metrics like Bitcoin dominance, and position themselves accordingly for potential gains.
