The altcoin market has been locked in a consolidation phase since mid-2022, but recent developments suggest a potential shift in the landscape. Technical indicators are pointing towards the possibility of a breakout, sparking speculation about the emergence of a new altcoin season. However, several key factors, including capital inflows, trading volume, and overcoming critical resistance, will play pivotal roles in determining the market’s trajectory.
Rising Altcoin Market Capitalization Signals Potential Breakout
A noteworthy development in the altcoin market is the formation of the fourth consecutive weekly green candle, each with a body size of approximately 6%. Collectively, these candles represent a substantial 35% price increase over the past month. This surge has propelled the altcoin market cap to the long-standing resistance area at $657 billion, a critical barrier that has endured since mid-2022.
The establishment of triple bottom support at $494 billion provides a solid foundation for a potential bull market. Notably, the altcoin market recorded its first higher high in 1.5 years in April, while subsequent months maintained a higher low at the support zone, indicating a potential shift in market sentiment.
Technical Indicators and Potential Breakout
Despite the positive momentum, analysts are closely watching declining trading volume, which has been decreasing since mid-2021. The mature compression pattern suggests a breakout may be imminent in the coming weeks or months. A decisive move above the long-term resistance area, coupled with a higher high and increasing volume, would signal the initiation of a new altcoin season.
Bullish readings from the Relative Strength Index (RSI), approaching the 70 threshold, further confirm the changing market sentiment. The RSI, reaching its highest level since November 2021, adds weight to the possibility of an impending bullish breakout.
Daily Analysis and Short-Term Corrections
On the daily interval, the altcoin market capitalization faces immediate resistance at $657 billion, prompting expectations of a short-term consolidation or correction. A shallow correction could see a retest of the previous resistance area at $608 billion, potentially validating it as support.
The daily RSI, already in overbought territory, suggests caution, but the absence of a bearish divergence, coupled with a steady increase in RSI accompanying the price rise, paints a relatively optimistic picture.
Altcoin Season Anticipation and Money Flow Cycle
Renowned crypto analyst Stockmoney Lizards foresees an approaching altcoin season, drawing parallels with historical patterns following Bitcoin’s halving. The potential for a 4x to 8x altcoin season, reminiscent of 2024-2025, looms if history repeats itself.
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Analysts like Crypto Clearly and Crypto Bitcoin Chris outline the typical money flow during an altcoin season. It often begins with Bitcoin’s surge, followed by Ethereum’s rise, and eventually flows into smaller altcoins, categorized by market cap or project freshness. The end of the altcoin season is marked by the unexpected resurgence of old projects.
Conclusion and Disclaimer
As the altcoin market shows signs of life, investors and enthusiasts eagerly await confirmation of a new altcoin season. However, it’s crucial to approach such analyses with caution. Market conditions can change rapidly, and this information is intended for informational purposes only. Always conduct thorough research and seek professional advice before making financial decisions.
