Altcoin season on the horizon? Expert analysis amidst Bitcoin dominance.

Can altcoins make a comeback? Evaluating expert predictions and key indicators following Bitcoin’s recent halving event.

The cryptocurrency market has been full of surprises since Bitcoin’s recent halving event. While many were expecting a surge in Bitcoin’s value, the reality has been a bit more subdued. In fact, the market has remained relatively stagnant, staying below the record-breaking highs seen in March 2024. During this time of anticipation and adjustment, altcoins have taken a hit.

Investors have shown a preference for Bitcoin over its alternatives, resulting in a noticeable decline in the altcoin market. Since March, the combined market cap of altcoins has experienced a sharp drop, falling from a peak of $1.27 trillion to a low of $908 billion by April 13.

Although there has been a modest recovery since then, with the market cap climbing back to around $1.06 trillion as of April 23, the path to stability remains uncertain.

The past month has been particularly challenging for many altcoins. Approximately 80% of the top 100 altcoins have seen declines ranging from 2% to as much as 50%.

Even Ethereum (ETH), the leading altcoin by market cap, has not been immune to this downturn. Despite reaching a high of $3,727 on April 8, its value has steadily declined in the following days. As of April 23, Ethereum is trading at approximately $3,200, reflecting the downward trend in the altcoin market.

With Bitcoin’s dominance remaining strong, where can altcoins potentially find their footing in the market? Let’s explore.

Are we entering an altcoin season?

In bullish market cycles, Bitcoin usually takes the lead, attracting mainstream attention and investment. Following Bitcoin’s surge, there is often a phenomenon called the “altcoin season” where capital flows into altcoins. This pattern has been observed in previous bull markets, such as those in 2017-2018 and 2020-2021, where altcoins sometimes outperformed Bitcoin.

During an altcoin season, Bitcoin’s dominance in the market tends to decrease as altcoins collectively gain a larger share. However, the current market situation does not reflect this trend.

Where can altcoins go, and what factors can trigger it?

Analyzing data from past cycles, we find that altcoin seasons historically begin shortly after the Bitcoin halving event.

One crucial metric to monitor for signs of an impending altcoin rally is the Altcoin Season Index. This index provides insights into the relative strength of altcoins compared to Bitcoin.

While the recent Bitcoin halving event initially caused the index to decline, indicating a period of Bitcoin dominance, it’s important to note that altcoins experienced a steeper decline in value during this time.

When the Altcoin Season Index surpasses a certain threshold, typically above 75, it suggests an increased probability of an altcoin rally.

As of the latest data, the Altcoin Season Index stands at 39, indicating that an altcoin season may still be some time away.

Another critical indicator is Tether (USDT) Dominance, which tracks the market share of the USDT stablecoin compared to other cryptocurrencies.

A downward trend in USDT dominance suggests that investors are becoming more willing to take on risk by exchanging stablecoins for crypto assets, potentially signaling the beginning of an altcoin season. The current analysis of the USDT dominance chart shows that making new lower lows correlates with the early signs of altcoin rallies.

Conversely, a shift towards an upward trend in USDT dominance would indicate a preference for stablecoins over altcoins, potentially delaying the onset of an altcoin season.

Timing is also crucial to consider. While altcoin rallies can happen at any time, they often coincide with specific market conditions, such as several weeks or months after Bitcoin’s halving events.

This delay can be attributed to the time it takes for market participants to digest the implications of Bitcoin’s halving and adjust their investments accordingly.

To determine whether altcoins are gaining momentum, it is important to pay close attention to an increase in trading volume accompanied by sustained price appreciation across multiple altcoins.

What do experts think?

Emperor, a seasoned crypto analyst, observes that Bitcoin dominance was on the rise before the halving event, approaching its peak support level established after the post-halving dump in 2020.

As we approach May, Emperor anticipates a potential major rally in altcoins, especially if Bitcoin remains stable.

Emperor suggests a speculative scenario where Bitcoin may recover to around $68,000 or even reach its all-time high, attracting top buyers looking to exit at profitable levels.

Meanwhile, altcoins, particularly those that have shown strength in recent months, may experience rallies.

Michaël van de Poppe, another respected crypto analyst, echoes the sentiment that post-halving market sentiments are shifting towards altcoins.

He notes that as Bitcoin dominance decreases, indicating a rotation in the market, the time for altcoins is on the horizon.

Michaël also highlights the role of Ethereum (ETH), which is evolving into a stronger settlement layer within the crypto ecosystem that could impact altcoin performance in the coming months.

Therefore, closely monitoring key indicators such as Bitcoin dominance and keeping an eye on altcoins is essential for making informed decisions about your crypto portfolios. Always remember the golden rule of investing: never invest more than you can afford to lose.

Read more: Bitcoin’s behavior after the halving: trends and analysis