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The cryptocurrency market is showing signs of renewed strength in altcoins, hinting at a possible altcoin season on the horizon. However, for this to be confirmed, Bitcoin (BTC) dominance must see a further decline.
Altcoin Market Cap Surpasses 200-Day EMA
Crypto analysts are keeping a close eye on several indicators that monitor altcoin behavior, with a key metric being the 200-day exponential moving average (EMA).
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The chart below shows that the OTHERS index, which tracks the market cap of cryptocurrencies excluding the top 10 digital assets by market capitalization, has surged past both the 100-day EMA and the 200-day EMA.
The 200-day EMA is a widely-used technical indicator that displays the average price of an asset over the past 200 days, with greater emphasis on recent prices. This indicator helps identify long-term trends: when the price is above the 200-day EMA, it suggests an upward trend, while being below it signals a potential downtrend.
Currently, the OTHERS index is valued at $227.5 billion, with the 200-day EMA and the 100-day EMA at $221.8 billion and $212.9 billion, respectively. According to crypto analyst Caleb Franzen, the last time this scenario occurred was in July 2023, when altcoins established firm support at these EMAs to achieve higher highs.
Another cryptocurrency analyst, Ali Martinez, has pointed out that the altcoin market cap – excluding BTC and Ethereum (ETH) – appears to have broken out of a prolonged downward trend. Although Martinez is not entirely convinced of a full-blown altcoin season yet, he describes the breakout as a “good start.”
Bitcoin Dominance Needs to Decline for Altseason
While the altcoin market cap breaking out of a prolonged downtrend is a positive sign for an impending altseason, BTC dominance (BTC.D) must decrease significantly from its current levels.
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Currently, Bitcoin dominance is at 57.5%. The chart below demonstrates that BTC.D has been on a consistent upward trajectory since at least November 2022. According to crypto analyst Yoddha, BTC.D appears poised to drop into the mid-40s, potentially setting the stage for a full-blown altseason.
Negentropic, co-founder of on-chain data platform Glassnode, commented that the market seems to be on the brink of an altcoin season. Referring to the Bitcoin-Altcoin Cycle chart from Swissblock, Negentropic notes that once BTC breaks its all-time high (ATH) and enters price discovery mode, altcoins should follow suit.
The Bitcoin-Altcoin Cycle chart illustrates the inverse relationship between BTC and altcoin price movements throughout the year. Any reading above 50 indicates the market has entered an altcoin-dominated phase, while a reading below 50 signals a BTC-led market.
Despite these encouraging indicators, it is crucial for the leading altcoin, ETH, to rebound against BTC before capital flows into mid-cap and small-cap altcoins. As previously reported, the ETH/BTC trading pair is currently at its lowest since April 2021. At the time of writing, BTC trades at $64,481, up 1.5% in the past 24 hours.
Conclusion
In conclusion, while several indicators point towards a potential altcoin season, the confirmation relies heavily on a decline in Bitcoin dominance. Investors and analysts should closely monitor these trends and metrics to make informed decisions in the ever-volatile cryptocurrency market.
Featured image from Unsplash, Charts from Swissblock Technologies and Tradingview.com
