Altcoin markets have been in a downtrend for the past two weeks, but key indicators suggest the recent decline could signal a “relative momentum bottom” and if history repeats itself, a “full rally” could soon follow, crypto analysts say.
According to Jamie Coutts, senior crypto analyst at Real Vision, the top 200 cryptocurrencies equal-weighted index is “still in a downtrend, but the recent sell-off, which hit 10% according to the Altseason indicator, is likely a relative momentum bottom.”
The Cryptocurrency Top 200 Equal Weighted Index is an equal-weighted index that tracks the performance of the top 200 cryptocurrencies by market cap against Bitcoin.
Coutts shared the chart below, which shows that the index is in a downtrend and that the Altseason Indicator has reached a 10% low, meaning that “only 10% of the top 200 have outperformed BTC over a 90-day rolling period.”
Historically, this has marked a market bottom and then preceded a sustained rally in altcoins.
“Altcoins could bounce around these levels for a while before we see a concerted takeoff, with many starting to build decent bases.”
Coutts also considered another metric for the broader cryptocurrency market to back up his predictions about the direction of the altcoin market: the number of daily active users (DAUs).
DAU is a metric that reflects the number of unique public addresses transacting on the blockchain each day.
“The growth is continuing,” Coutts said, noting that the number of DAUs across all blockchains has increased by 97% since the beginning of the year.
He said that as the number of users increases, user fees also increase, which leads to “asset price appreciation.”
“I think some altcoins are ready for round 2,” popular cryptocurrency analyst Moustache wrote in a July 15 post, adding that the much-anticipated launch of a spot Ethereum ETF could provide the needed boost.
In a previous post, Moustache shared the following chart, which shows that the altcoin market is repeating a similar setup to 2020 before entering the “strongest wave of the bull market.”
It’s still bitcoin season
The Bitcoin Dominance Chart (which measures BTC’s market share relative to the overall cryptocurrency market) is one of the commonly used indicators to indicate whether or not altseason has begun. It can provide traders with an overall picture of investor sentiment and risk appetite in the market.
The indicator has been trending upward since early 2024, reaching a three-year high of 56.5% on April 13. At the time of publication, BTC dominance was at 54%, indicating that it is still Bitcoin season.
That means altcoins are still underperforming compared to Bitcoin.
According to data from Blockchain Center, only 37% of the top 50 altcoins have outperformed BTC over the past three months. While this is a positive sign, it is still not enough to declare an altcoin season. This ratio would have to be above 75% to declare an alt season.
That means that signs of altcoin season are starting to appear, but it’s still too early to make a judgment call.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.