The altcoin market has lost a lot of money over the past month due to concerns surrounding Bitcoin’s halving.
Ali Martinez, a well-known cryptocurrency analyst, observed on X (formerly Twitter) that the altcoin season began shortly after Bitcoin’s halving.
Altcoin season is when altcoins’ market cap increases exponentially. Given how capital rotation works in the crypto space, this situation usually doesn’t last for more than a few months.
However, it provides investors with a great opportunity to take profits. Is another altcoin season around the corner?
The Altcoin Season Index reached above 75 in early 2024. The halving event caused the index to oscillate to a value of 25 to reflect Bitcoin season — but in reality, altcoins have lost much more value than Bitcoin over the past month. This is a result of the selling pressure behind Bitcoin that is feared. At press time, the index is at 39 and does not reflect the arrival of altcoin season. (Click on the avatar to see the introduction)
Technical analysis of the dominant chart shows that its downtrend is nearing its end. USDTD’s downtrend is a good sign as it shows that investors are taking risk and exchanging stablecoins for crypto assets. An uptrend where USDT dominates would show the opposite.
Therefore, in the alt season, we expect a strong downtrend. The Directional Movement Index on the 3-day chart shows a downtrend from late October to early April.
This is quite a long period of time, indicating that the market needs time to reset before the next downtrend. In addition, the cyan box highlights the BTC halvings in 2020 and 2024.
If the similarities of 2020 continue, we may see altcoins lose more value in the coming weeks. AMBCrypto’s analysis of CryptoQuant data shows that purchasing power has been climbing since mid-October. The exchange reserves of stablecoins are a reflection of the purchasing power of the cryptocurrency market. (Click the avatar to see the exchange, introduction)
Compared to the run from 2020 to 2021, this indicator has not yet gone parabolic like the previous cycle. The market capitalization expanded significantly in 2021, and the exchange reserves climbed sharply.
Therefore, another rapid growth in stablecoin reserves would indicate that another altcoin season is about to begin.Combining this with the Tether dominance chart and the Altcoin Seasonal Index could give investors an edge in the market.
