Altcoin Market Cap and Bitcoin Dominance Trends Indicate Altseason Signs

Key Takeaways

• The Altcoin Market Cap (ALTCAP) trades in a descending parallel channel.
• Bitcoin’s Dominance Rate (BTCD) shows signs of a potential market top.
• Will we still see an altcoin season this cycle, or has the possibility slipped by?

The crypto market has been in a downtrend since March, during which Bitcoin (BTC) fell 25%. Altcoins fared worse, declining by 35% on average, increasing Bitcoin’s dominance. This has put the hopes of a much-anticipated altcoin season on hold.

However, signs developing in the Bitcoin Dominance Rate (BTCD) and Altcoin Market Cap (ALTCAP) suggest altcoin season is still a possibility. Let’s dive in!

Altcoin Market Capitalization Bounces

Similarly to Bitcoin, the altcoin market cap has fallen since its yearly high in March. The decline culminated with a low of $721 billion on Aug. 5. ALTCAP bounced afterward, creating a very long lower wick (white), considered a sign of buying pressure.

The bounce happened at a confluence of support levels, specifically horizontal, diagonal, and Fibonacci support. Despite the decline, ALTCAP did not break down from its descending channel pattern. Rather, the bounce saved the alleged breakdown.

Even though ALTCAP has fallen in the past two weeks, it still trades within the channel’s confines.

However, technical indicators do not provide any bullish signs. On the contrary, the Relative Strength Index (RSI) indicator is falling below 50, while the MACD is negative.

What Does the Wave Count Say?

The most likely wave count suggests the ALTCAP will soon begin to increase. The Aug. 5 bottom looks like a textbook fourth-wave pullback since it ended at the middle of the long-term channel connecting waves one and two (white).

If the count is accurate, ALTCAP has started the fifth and final wave of the current market cycle. The first target for the top is $1.61 trillion, created by the 1.61 external Fibonacci retracement of wave four. A 95% increase in Altcoin Market Cap is needed to reach it.

So, while the future outlook for the altcoin market cap is positive, looking at the BTCD chart is required to determine if altcoins will outperform

Bitcoin Dominance Could See Decline

The Bitcoin Dominance rate shows signs of a potential top. The most likely wave count shows a completed five-wave upward movement, in which the fifth wave developed into an ending diagonal. This pattern often transpires near the end of an upward movement. The sub-wave count (black) aligns with this scenario.

Technical indicators also give a bearish outlook. The RSI and MACD have generated considerable bearish divergence (green), which could lead to a downward movement.

Also, the fact that BTCD is between the 0.5-0.618 Fibonacci retracement resistance makes a bearish reversal more likely.

Altcoin Season Hopes Remain Alive

The combination of the positive outlook from ALTCAP and the negative outlook from BTCD suggests that a crypto altcoin season is still possible. To confirm this, BTCD has to break down below the wedge’s support at 55%, and ALTCAP has to break out from its descending parallel channel.

About the Author

Valdrin Tahiri

Valdrin discovered cryptocurrencies while getting his MSc in Financial Markets from the Barcelona School of Economics in 2017. He has been an avid investor and trader since. Valdrin has written for several cryptocurrency media companies such as BeInCrypto and CoinGape.

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