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Altcoin Season on the Horizon?
After Bitcoin’s (BTC/USDT) failed assault on $100K and a correction to the $90K+ zone, the market buzz is building for another attempt at six figures. Meanwhile, the Altcoin Season Index (ASI) has surged to 61, inching closer to the magical 75+ mark that signals a full-blown altseason. Thanksgiving could become even sweeter if altcoins start taking the spotlight—but let’s not get ahead of ourselves.
Source: coinmarketcap.com
While early signs of altcoin strength are emerging, emotional decisions can be costly. To time this transition properly, we turn to three critical charts:
1. BTC Dominance (BTC.D) – Tracks Bitcoin's share of the market.
2. ETH/BTC – Ethereum’s performance as the altcoin market leader.
3. TOTAL2 – The total market cap of altcoins, excluding Bitcoin, for macro confirmation.
Let’s dissect the evidence before jumping to conclusions.
Chart 1: BTC Dominance (BTC.D) - Weekly
Bitcoin dominance remains in a precarious position within a rising channel on the weekly timeframe, where three critical levels dictate the narrative:
1. Horizontal Support (~58%):
o This multi-year pivot zone has historically acted as a foundation for BTC dominance. Losing it would significantly weaken Bitcoin's hold on the market.
2. Channel Support (Lower Border):
o The rising channel has defined BTC dominance since early 2023. A break below it would suggest a structural shift, favoring altcoins.
3. 50-Week Moving Average (~55.5%):
o This dynamic level has acted as a trend decider. Losing it would further solidify bearish dominance for Bitcoin and strengthen the case for altseason.
What to Watch:
• A breakdown below all three levels, potentially confirmed by a retest from below, would validate a rotation into altcoins.
• Beware of temporary dominance spikes during flash crashes, as Bitcoin often serves as a safe haven during volatility.
Chart 2: ETH/BTC – Daily
Ethereum vs. Bitcoin offers a critical view of altcoin strength. The pair has shown signs of life, attempting to break out of a descending channel after months of underperformance. Key observations include:
1. Resistance at 0.038:
o ETH/BTC is battling the upper boundary of its descending channel and the 50-day moving average. A decisive breakout here could mark the beginning of a trend reversal.
2. Key Market Structure Level at 0.0415:
o Reclaiming 0.0415 is critical for confirming a bullish market structure and positioning Ethereum as the leader of the altcoin rally.
3. Volume Support:
o Recent increases in trading volume suggest growing investor confidence. Paired with a breakout, this could confirm a reversal.
What to Watch:
• A breakout above 0.0415 would signal strength, while further rejection could delay an altseason rally. Ethereum's performance often sets the tone for altcoins.
Chart 3: TOTAL2 – Weekly
The TOTAL2 chart, which tracks the total market cap of altcoins excluding Bitcoin, is perhaps the cleanest of all indicators. It recently broke out of a massive three-year Cup & Handle (C&H) pattern, signaling long-term bullish potential.
1. The Breakout:
o The C&H breakout above $2.6T is a textbook bullish signal, confirmed by a significant volume spike.
2. Targets:
o Based on the C&H projection, TOTAL2 could rise 200% from its bottom, targeting around $5.2T.
3. Support Zones:
o As long as TOTAL2 stays above $2.6T, the bullish structure remains intact. Any retest of this level would provide further confirmation.
Why It Matters:
This breakout indicates a shift in the macro trend for altcoins. It suggests the potential for a sustained altcoin rally if Bitcoin dominance weakens and ETH/BTC aligns.
Conclusion: Is Altseason and Santa Rally Incoming?
The setup for an altseason looks increasingly promising. BTC dominance flirts with critical support, ETH/BTC eyes a reversal, and TOTAL2 has confirmed a major bullish breakout. Combine these with the potential for a Santa Rally, and the stage could be set for a spectacular finish to 2024.
That said, as the classic trading wisdom goes: "Confirmation is key." Acting on one chart alone is reckless; when all three align, the probabilities for a successful altcoin rotation increase dramatically.
For those celebrating Thanksgiving, enjoy the holiday—just don’t overindulge, whether it’s on turkey or early altcoin shopping. Stay patient, stay disciplined, and let the charts guide your next moves.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
