Altcoins Outgrow Total Market Cap with 22% Jump from August Lows— What’s Next?

Key Takeaways

• The Total Crypto Market Cap (TOTALCAP) has increased by 20% since Aug. 5.
• The Altcoin Market Cap (ALTCAP) has increased by 22% since the same low.
• Will altcoins continue to outperform for the rest of the year?

Following a promising start to 2024, the crypto market’s upward momentum stalled in March, giving way to a sharp 40% correction that threatened to plunge the market to new yearly lows by Aug. 5.

However, in a remarkable display of resilience, the market has since rebounded, forging a series of higher lows that signal a potential turnaround.

Notably, altcoins have been leading the charge, outpacing Bitcoin (BTC) in their recovery.

As the market regains footing, a key question emerges: will the crypto market cap continue to rise in the latter half of 2024, and will altcoins remain the driving force behind this growth, or will Bitcoin reassert its dominance?

CryptoMarket Cap Bounces After Slide

After reaching a yearly high of $2.72 trillion in March, the crypto market cap began a gradual decline. Over 147 days, it shed 38% of its value, hitting a low of $1.69 trillion on Aug. 5.

While the market has seen sharper corrections, none have lasted as long as this recent downturn.

The final correction before the all-time high in the 2021 bull market was more severe, at 56%, but lasted only 42 days.

Despite the differences in magnitude and duration, the technical indicators show striking similarities between the two periods.

The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) readings are almost identical to those in June 2021. Specifically:

• The RSI fell below 50 twice (marked by the black circle), signaling a bottom and starting an upward movement.
•  The MACD made a bearish cross but regained its footing and started an upward movement shortly after.

The wave count suggests that the crypto market cap has just completed wave four in a five-wave increase that started in December 2022. The extended wave three and its sub-wave count (in black) are likely the reason for the protracted correction of wave four.

The Aug. 5 low occurred in the middle of a long-term parallel channel (white), connecting waves two and four, which is a characteristic of a fourth-wave pullback. Additionally:

• The crypto market cap has increased by 22% since the low.
• The 3-day RSI has generated a bullish divergence, enhancing the likelihood of a bullish reversal.

Moreover, A long lower wick (white icon) indicates that bulls have prevented a breakdown.

If a breakout occurs, the next target will be at $3.33 trillion, a new all-time high, as indicated by the 1.61 external Fibonacci retracement of wave four.

Altcoin Market Cap Regains Support

The altcoin market cap chart shows a similar movement to the crypto market cap. This is quite clear in the Aug. 5 bottom, which validated a long — and short-term parallel channel and completed a fourth-wave pullback (black circle).

The altcoin market cap created a longer lower wick and led to a 22% increase, slightly higher than the 20% for the crypto market cap. Also, the 3-day RSI created a bullish divergence (green), supporting the reversal.

A breakout from this parallel channel could strengthen altcoin dominance and start an alt season. If this happens, the 1.61 external Fibonacci retracement creates the next target at $996 billion.

Interestingly, this will not be a new all-time high. With this in mind, wave five may extend further, reaching the 2.61 extension at $1.33 trillion, or the altcoin market cap will not reach a new all-time high this cycle.