The overall altcoin market capitalization has been consolidating since mid-2022. Technical indicators are currently pointing to the possibility of a breakout that will mark the start of a new altseason.
However, this will require a new influx of capital, an increase in altcoin trading volume and a confident consolidation above the critical resistance area.
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Altcoin market capitalization continues to rise
The altcoin market capitalization is in the process of forming its fourth consecutive weekly green candle. The body size of each candle is about 6%, but together with the wicks they represent a 35% increase in price over the past month.
This significant move higher pushes the indicator towards the long-term resistance zone at $657 billion, which has existed since mid-2022 and acted as support several times during the 2021 bull market.
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Altcoin market capitalization also formed a triple support at $494 billion, creating a solid structure for a potential bull market. The first higher high in the last 1.5 years was reached in April, and in June, August and October the indicator managed to hold a higher low in the support zone.
If altcoin capitalization continues to rise, it will not only lead to an exit from the long-term resistance zone, but also the formation of another higher high, which could confirm the start of a new bull market.
Source: TradingView
It is also worth paying attention to the trading volume, which has been falling since mid-2021. The squeeze pattern appears to be very mature, so the chances of a breakout from it in the coming weeks or months are very high.
Relative Strength Index (RSI), which is growing and approaching 70, confirms the possibility of further growth and a change in market sentiment.
Breakout after short correction
Technical analysis of the daily timeframe confirms the bullish forecast. Firstly, the altcoin market capitalization has reached resistance at $657 billion. Here we can expect short-term consolidation and a possible correction.
If the correction is shallow, the indicator will retest the previous resistance area at $608 billion and confirm it as support.
Source: TradingView
The daily RSI is already in overbought territory, but has not yet formed a bearish divergence.
It is interesting that, unlike the weekly chart, the first signs of an increase in trading volume are already visible on the daily chart. The descending resistance line, which has existed since March, has been broken several times in recent days. If this trend continues, it may soon appear on a higher timeframe.
A full altcoin season will begin in 2024
Famous cryptanalyst Stockmoney Lizards shared with subscribers his thoughts on the timing of the start of the next altseason. In his opinion, the peak of the altcoin cycle occurred on the 505th day after the BTC halving.
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If the situation repeats itself, then the current rally could be just a prelude to a full-fledged altcoin season with 4x-8x growth that the market could experience in 2024-2025.
Source: TradingView
Another analyst Crypto Clearly talked about the standard movement of money during a bull market. The standard scenario begins with a sharp increase in the Bitcoin rate. Then Ethereum becomes the main beneficiary, and after it capital flows into other altcoins – from those with large market capitalization to medium and small ones. The growth of the latter in geometric progression signals the end of the altcoin season.
Source: Secrets of Crypto
Crypto Bitcoin Chris supplemented this diagram with the direction of movement during the altseason, regardless of market capitalization.
In his opinion, the “freshness” of the project plays a big role, since tokens representing innovative technologies are usually promoted at the beginning of the market. They are the leaders of each cycle.
Source: Crypto Bitcoin Chris
They are followed by the rise of less popular altcoins, which nevertheless have high fundamental value and hold value relative to Bitcoin. The end of the alt-season is characterized by the growth of old projects, often considered “dead”.
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2023-11-12 06:46:24
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