The altcoin market has seen better days. Over the past two weeks, prices have been trending downward, leaving investors worried. However, a key indicator suggests that this downward trend may be coming to an end. Crypto analysts believe that the recent slump could signal a “relative momentum bottom,” hinting that the “strongest wave” is yet to come.
Jamie Coutts, Chief Crypto Analyst at Real Vision, has shared insights into the current state of the altcoin market. According to the tweet Coutts made on X FKA Twitter, the crypto Top 200 Equal Weight Index has been trending down. However, the Altseason Indicator, which recently hit a low of 10%, suggests that the market may be near its bottom. This means that only 10% of the top 200 cryptocurrencies have outperformed Bitcoin (BTC) over the past 90 days. Historically, such lows have often preceded significant rallies in altcoins.
Coutts explained that the crypto Top 200 Equal Weight Index, an equally weighted index tracking the performance of the top 200 cryptocurrencies by market capitalisation, has shown similar patterns in the past. The recent washout, with the Altseason Indicator hitting 10%, likely marks a relative momentum bottom. This indicator reaching such lows has previously signalled the beginning of a sustained rally in altcoins.
“Altcoins could still bounce around these levels for a while before we see a concerted take-off,” said Coutts, adding that many altcoins have already started to build decent bases.
One crucial factor supporting this prediction is the daily active user (DAU) count across the broader crypto market. The DAU count reflects the number of unique public addresses transacting on a blockchain each day. Coutts noted that the DAU count across all blockchains is up 97% year-to-date, suggesting continued growth. More users mean more transaction fees, which translates to higher asset prices. “Growth continues unabated,” said Coutts, indicating a positive outlook for the altcoin market.
Popular crypto analyst Moustache echoed Coutts’ sentiment in a recent post. “I think some Altcoins out there are ready for round 2,” Moustache said, pointing to the anticipated launch of spot Ethereum (ETH) ETFs as a potential catalyst. Moustache also shared a chart showing that the altcoin market cap is repeating a setup similar to 2020, which led to a strong wave in the bull run. This historical pattern suggests that altcoins may be gearing up for a significant breakout.
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Altcoin Market: Bitcoin Dominance and Altcoin Season
Despite these optimistic predictions, it’s still officially Bitcoin season. The Bitcoin dominance chart, which measures BTC’s market share relative to the overall crypto market, is a key indicator used to gauge the beginning of an altseason. Since the start of 2024, this indicator has been on an upward trend, reaching a three-year high of 56.5% on April 13. As of now, BTC dominance stands at 54%, indicating that Bitcoin is still outperforming altcoins.
According to data from Blockchain Center, only 37% of the top 50 altcoins have outperformed BTC over the last three months. While this is a positive sign, it’s not yet sufficient to declare an altseason. For an altseason to be officially recognised, over 75% of the top 50 altcoins must outperform Bitcoin.
This means that although there are signs of an altcoin season emerging, it might be too early to make the call. The market needs to see a more significant shift in investor sentiment and risk appetite before a full-blown altseason can be declared. Investors are still primarily focused on Bitcoin (BTC), but the groundwork for a potential altcoin rally is being laid.
Looking ahead, the altcoin market holds promise, especially with the increasing DAU count and the anticipated launch of spot Ethereum ETFs. These factors, combined with the historical patterns highlighted by analysts like Coutts and Moustache, suggest that altcoins may be poised for a breakout.
In conclusion, while the altcoin market has faced challenges recently, the indicators suggest that it may be nearing a momentum bottom. Historical patterns and the current growth in daily active users point to the potential for a significant rally in altcoins. Although it is still Bitcoin season, and altcoins have some catching up to do, the foundations for an altseason are being laid. Investors should keep a close eye on the market and be prepared for what could be the strongest wave yet.
Staying connected with reliable sources like The BIT Journal can provide valuable insights and updates on the latest trends in the crypto market.
