After a massive surge in market leader Bitcoin (BTC), the cryptocurrency market's attention is now turning to altcoins. This shift could trigger what traders typically refer to as altseason, with altcoins outperforming BTC.
So far, Bitcoin has expanded its dominance over the other cryptocurrencies. However, at press time, the Bitcoin Dominance (BTC.D) index reached a high of 55.35% and turned lower at 53.42%.
Bitcoin Dominance Index (BTC.D), 4-hour chart. Source: TradingView
Previously, BTC.D reaching new highs and falling signaled the start of the high season. This happens because capital initially flows to Bitcoin in bull markets. Consequently, traders convert part of their profits into altcoins, increasing their highly volatile market caps.
The altcoin market cap index illustrates this capital outflow and inflow and is often used as a valuable indicator to identify the start of altcoin season.
Altseason: Altcoin total market cap breaks out of accumulation phase
Crypto and stock analyst Jelle notably spotted an altcoin's market cap breaking out of an accumulation range. Jelle shared this analysis on December 8th on X (formerly Twitter) and showed the range from 2022.
Notably, in the chart above, altcoins had a capitalization of $723 billion. According to the technical analyst, they are currently in a “retest” zone.
If the pattern of the last cycle occurs, this current retest phase may trigger the next Altseason phase. Interestingly, Jelle expects the altcoin’s market cap to reach new highs and surpass the $1.8 trillion market cap.
However, it is possible that the retest will fail and the index will return to the accumulation phase. It is important to understand that such a decline would invalidate Jelle's analysis and delay the expected altseason.
The cryptocurrency market is volatile and unpredictable, which is exacerbated for altcoins due to their lower liquidity. Therefore, crypto traders and investors need to be able to change and adapt according to the signals while ensuring appropriate risk management.
Disclaimer: The content of this website should not be considered investment advice. Investing is speculative. When you invest, your capital is at risk.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.