[TL; DR]
Many altcoins are in the accumulation phase.
The U.S interest rates cut may trigger an altcoin season.
During altcoin seasons market volatility is often high.
Introduction
The price of bitcoin has been steadily decreasing over the past few months. As a result, its dominance on the market has been falling. The decline in bitcoin’s performance in the second half of the year comes after the cryptocurrency had a strong rally during the first quarter that led to its new all-time high attained in March. Also, the fact that the decline in bitcoin dominance started a few months after the halving event has led crypto analysts to conclude that the altcoin season is on its way.
Growing Anticipation for an Altcoin Season amid Bitcoin's Price Decline
Based on the current cryptocurrency market trend altcoins may outperform bitcoin within the last quarter of the year. Although the bitcoin price drop has been expected to occur after the halving event it seems it is no longer a market correction but a strong downtrend. If the bitcoin drawdown continues while some altcoins trend, an altseason may start. An altcoin season is a period when alternative cryptocurrencies perform better than bitcoin.
Usually, an altcoin season starts when the bitcoin price stabilizes after a strong rally. During that period bitcoin will move sideways as part of a consolidation phase while altcoins continue rallying. Normally, during the bitcoin price stagnation investors will move their funds to cryptocurrencies that will be performing well. There are many cryptocurrencies that have the potential to rally. These include layer-1 blockchain based digital currencies, AI tokens and meme coins. For example, in the past few weeks Solana, XRP, Sun Token (SUN), Notcoin (NOT), DogWifHat and other meme coins rallied. Some of these still show bullish pressure.
Altcoin Season: Its Significance after Bitcoin Halving
One of the crypto market trends is that a halving event is followed by either a straight rally or a correction. In the current situation, there has been a market correction after the 2024 April bitcoin halving event. This time around, during the post-halving period, many altcoins have rallied earlier than expected. In previous years, they started rallying during the last quarters. Probably, the strong market performance that occurred during the post spot Bitcoin ETF launch era disrupted the normal sequence of events that follow a normal bitcoin halving event.
The other unique thing about this year’s post halving rally is the proliferation of new coins, especially meme coins. With this, investor funds have been spread among many cryptocurrencies, especially emerging tokens such as Notcoin, WIF, BONK, Book of meme (BOME) and Toncoin. This may result in the altcoin season beginning earlier than in the past. However, as of now, no single altcoin has dominated the market during the post halving period.
Analysis of Altcoin Trading and Emergence of Altcoin Season
Several analysts have given their views on the possibility of the altcoin season coming earlier than otherwise. In an X post, Mags, a crypto analyst said that most altcoins are trading around 60% to 80% of their previous highs. He emphasized that the altseason may start very soon since Total2, a metric that tracks the performance of the top 125 altcoins, is above the ascending trendline. Total2 Chart: X/Twitter
The image above shows Total2. As you note, the market cap is trending above the trendline. And as the graph shows the altcoins have been in an accumulation zone. Also as the illustration indicates, there is a high possibility that the altcoin market capitalization may shoot, which may trigger an altcoin season.
Another illustration that has been used to show a possibility that an altcoin season may start soon is the Wyckoff accumulation pattern. Moustache, another analyst, pointed out that altcoins often come after accumulation zones which are phases of the altcoin accumulation pattern. According to Moustache at the moment, the market is in the altcoin accumulation zone, indicating that an altseason could start soon. Altcoins Consolidate within Wyckoff Pattern: x.com/Moustache
Based on the altcoin market analysis the alternative cryptocurrencies are within the last phase of the graph above, the Wyckoff pattern. Since it is an accumulation phase the altcoin market cap may soon increase in line with their rising prices. Over the years Moustache noted that every time the market touches the trendline a bullish reversal would occur. The reason is that institutional investors normally accumulate an asset when its price is at the lowest point possible within a given period.
Captain Faibik, a renowned crypto trader also believes that the altcoin season is around the corner. However, this analyst has a different reason from the two cited above. Whereas Moustache and Mags focused on the altcoin side Captain Faibik has focused on the bitcoin side. According to him bitcoin is in a rising wedge in the bitcoin dominance chart. This pattern indicates a potential for a downward reversal in the near future. Bitcoin Rising Wedge: x.com/Captainfaibik
As observed in the picture, bitcoin is within a wedge. If its Dominance Breaks down the wedge pattern the altcoins will challenge its market leadership. This is the point where the altcoin season may begin.
Economic Factors Influencing the Performance of the Crypto Market
Although there is a tussle between the performance of altcoins and that of bitcoin some economic factors are at work. The main economic factor at play now is the likely change in the United States monetary policy. If the Federal Reserve cuts interest rates that may increase the consumer spending power. As a result, the investors may have some funds to invest in riskier assets such as cryptocurrencies. If that happens the U.S expansionary monetary policy may trigger a bullish market as there may be a rise in crypto investment. In recent weeks, though, there was a fear of recession in the United States.
Analysts’ Views: Will an Altcoin Season Start Soon?
We have already observed that there are a number of crypto analysts that believe that the altcoin season may start soon. However, there are some people who are skeptical about that. First, there are some analysts who say that the altseason may not start as soon as expected. On the other hand, some think that even if the altcoin season comes it may not be as rigorous as those of 2020 and 2017. One reason why some crypto experts maintain this view is due to many changes that are taking place within the crypto sector. For example, many new coins and tokens are being launched periodically.
Regarding this, Jeff Kirdeikis, a venture capitalist said, “Anyone can launch an altcoin now, which has completely diluted the market. If altseason ever happens again, it will be a fraction of the gains from 17 or 20. Meanwhile, Bitcoin keeps gaining market share.”
Another analyst, CryptoD has this to say: “Yes I agree with this. There is huge altcoin dilution, and the liquidity is not there at all to match it. Retail is not interested. No wonder people go to the casino and to memes to get 4x or 10x.”
Other analysts believe that the altcoin season may not come due to the proliferation of new tokens and coins, especially meme coins. The reason is that most traders always rush to buy and own the recently launched tokens.
Challenges of Altcoin Season
The altcoin season has its own challenges that investors should be aware of. First, price volatility is high since many people will be speculating about the different assets. Due to high volatility it is often difficult to predict their price performances.
During the altcoin season there is a high chance of a surge in market manipulation, scams and frauds. Therefore, the investors should adopt serious security measures and do much research before investing in new crypto assets. Also, during such periods hackers are very active. They will target digital wallets and exchanges.
Another problem is information overload since the investors should search for the best investment opportunities on the market at any time. Since the prices often change rapidly, astute investors keep on scanning the market.
Read also: How to Make Money With Crypto
Conclusion
Some market analysts believe that the altcoin season may start any time soon. There are various technical indicators that show that the prices of some altcoins may rise in the near future. On the other hand, the market anticipates the price of bitcoin to keep falling steadily. Currently, the market expects that the U.S expansionary monetary policy may trigger an altcoin rally.