Altcoin Market Hits Historic Lows: A Bullish Indicator?
The altcoin market has experienced a challenging year in 2022 and a neutral but hopeful first half of 2023. Long-term indicators reveal that altcoins are currently at historic lows, which raises the question of whether this is a bullish indicator for the market.
Altcoin Market at 2019-2020 Lows
Data from the Altcoin Season Index shows that the altcoin market has dropped to levels last seen in 2019-2020. While this alone may not be an optimistic sign for altcoin holders, historical data indicates that these lows preceded the exponential bull market of the TOTAL2 chart, which began in late 2020.
The Altcoin Season Index provides insights into the relationship between the price growth of Bitcoin (BTC) and the price growth of the top 50 altcoins. When Bitcoin’s price is increasing more or decreasing less than the prices of the top altcoins, it suggests an ongoing Bitcoin-dominant market. On the other hand, if Bitcoin’s price is declining more or increasing less than the altcoins, it indicates a dominant altcoin market.
In most cases, the chart falls within the neutral range between 25 and 75, indicating that neither the Bitcoin market nor the altcoin market currently dominates the cryptocurrency sector.
However, in the long-term time frame of the Altcoin Season Index, we can see that the altcoin market has declined to historical lows. This suggests that Bitcoin is currently in a dominant season while altcoins are struggling.
Total2 in Long-Term Accumulation
An analysis of previous cryptocurrency market cycles reveals similarities in the long-term chart of the altcoin market’s total capitalization (TOTAL2). In 2017, the altcoin market experienced an exponential bull market, reaching a peak of $474.50 billion in January 2018. This was followed by a sharp decline lasting 12 months, hitting a bottom of $36.75 billion in December 2018.
The bottom marked the end of the bear market and initiated a period of long-term accumulation. The main phase of accumulation took place between May 2019 and June 2020, where the altcoin market reached historic lows against Bitcoin.
After the accumulation phase, the mature phase of the bull market began, with TOTAL2 experiencing exponential growth and reaching an all-time high of $1.71 trillion in November 2021.
Following the ATH, the altcoin market suffered a significant decline, losing around 75% of its value and reaching a bottom of $427.57 billion in June 2022. Six months later, TOTAL2 approached that bottom again, forming a bullish double-bottom pattern.
The recent revival and bounce in the altcoin market indicate the beginning of the accumulation phase or the early stage of the bull market. However, just this month, the altcoin market dropped to historic lows against BTC. If the accumulation phase continues for another 13 months, it is predicted that the mature phase of the bull market will begin around September 2024.
While this means that altcoin holders still have a long way to go to see comparable profits to previous cycles, it also presents opportunities to build a long-term portfolio that can yield impressive returns during the next bull market.
It is worth noting that only five altcoins from the top 50 market capitalization ranking have outperformed BTC in the past year. These altcoins are INJ (242%), XDC (68%), XRP (56%), BCH (50%), and LTC (25%). Bitcoin itself saw a 14.3% increase, outpacing the remaining 44 altcoins.
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