There seems to be a glimmer of optimism among the chaos, even if Bitcoin's recent price slump has put other altcoins on a wild plummet, with falls ranging from 30% to 70%.
To rebound and explode above its greatest levels, the altcoin market requires the current Bitcoin Halving in April.
A Path to Altcoin Success: The Bitcoin Halving?
The block reward for miners is cut in half every four years during Bitcoin's Halving, a momentous event. As a rule, when supply drops, the cryptocurrency market as a whole, including Bitcoin, goes into a positive surge.
There is a clear possibility for altcoins to increase after each Bitcoin halving, according to crypto expert Wise Advice. What stood out to the analyst was:
The altcoin season will occur at a certain time. I will demonstrate it to you. Breaking off This is the deciding factor [...] The BTC ATH will appear after a year or so, when the halving takes place. Also, cryptocurrency like ETH see a surge around that time.
In the past, during the Halving phase, altcoins have seen a surge in popularity, which has caused their values to rise. This is because people are worried about Bitcoin's scarcity after this occurrence.
For instance, during the prior Bitcoin Halving on November 9, 2021, some prominent cryptocurrencies reached new all-time highs. These included Polkadot. (DOT), Avalanche (AVAX), Ethereum (ETH), and Solana (SOL).
In perspective, ETH reached its all-time high of $4,800 on November 10 (as disclosed by Wise Advice), SOL reached its all-time high of $250 five days earlier, DOT peaked at $55 on November 4th, and AVAX peaked at $144 on November 21st.
When It Comes To Seasoning, How Does The Halving Affect Alts?
These trends support a recurring phenomenon, as mentioned in the article by Wise Advice: after the halving, investors shift their focus from Bitcoin to altcoins, which gives them a huge boost in the market.
Prices rise in direct proportion to their purchasing power. Plus, it generates profits for investors. They transfer some of the proceeds to Ethereum and other tokens after selling some. Even a $100 million injection may have a significant impact on them, as their market caps are far smaller (only one month before the ATH, Bitcoin's MC was 2.5 times bigger than Ethereum's). Because of this, Solana and Polkadot's ATH was four or five days quicker. Alts that are even smaller get funding thereafter. Moreover, they begin to outperform large ones. The larger the increase, the smaller they were.
An important indicator that tracks this change is Bitcoin's dominance index, which compares Bitcoin's market value to the overall market cap of all cryptocurrencies. As shown after the halving, a drop in this index indicates more people are interested in alternative cryptocurrencies.
The market share of Bitcoin has dropped somewhat from 55% to 54.60%. As reported by TradingView earlier this month. Importantly, the index is still over 50%, which means that the market is still leaning towards BTC.
On the other hand, the current slump can signal the beginning of an altcoin boom. Glassnode analysts reach a similar conclusion, drawing parallels between the current market situation and the late 2020 spike in smaller equities and riskier assets, which they say heralds the arrival of altcoin season.