Signs Pointing to Altcoin Season Approaching?

The altcoin market showed strong performance over the last five months, yet was hindered by halving fears. The upcoming rally may require some time to develop, but it will come with clear indicators.

Altcoin Season

The altcoin market has lost significant value over the past month due to concerns about the Bitcoin (BTC) halving event. Famous crypto analyst Ali Martinez shared on X (formerly Twitter) that altcoin season started immediately after the Bitcoin halving.

Altcoin season is a time when the market capitalization of altcoins increases rapidly. Given the capital mobility mechanism that is said to operate in the crypto space, this usually doesn’t last more than a few months. However, this is a good opportunity for investors to gain profits.

A new Altcoin season is coming?

The altcoin season index reached above 75 in early 2024. The halving pushed the index down to 25 to reflect Bitcoin season – but in reality, altcoins have lost more value than Bitcoin over time.

This is a result of concerns about selling pressure from Bitcoin. Currently, the index is at 39 and does not reflect the arrival of an altcoin season. Technical analysis on the Tether (USDT) dominance chart shows that the downtrend is about to end.

The decline in USDT price is a positive sign, because it shows that investors are taking risks and using stablecoins to trade with crypto assets. If the USDT dominance trend increases, it will reflect the opposite situation.

Altcoin Season Index

Source: Ali_charts on X

Therefore, in the altcoin season, we want to see a strong downtrend. The directional movement index on the 3-day chart shows a downtrend from late October to early April.

This is a significant period and indicates that the market will need time to reset before the next downtrend. Additionally, the green-blue boxes highlight the Bitcoin halving events in 2020 and 2024.

If the similarities from 2020 play out, we may see altcoins lose more value in the coming weeks.

Increasing buying pressure

Tether Dominance

Source: USDT.D on TradingView

Analysis of CryptoQuant data shows that buying pressure has been increasing since mid-October. The exchange reserves of stablecoins reflect buying pressure in the cryptocurrency market.

Compared to the 2020-2021 period, this index has not followed a parabolic path like in the previous cycle. The market capitalization expansion in 2021 saw exchange reserves increase significantly.

Stablecoin Exchange Reserve

Source: CryptoQuant

Therefore, another rapid increase in stablecoin reserves would indicate another altcoin season is on the horizon.

Combining this with the Tether dominance chart and the altcoin season index could give investors an advantage in the market.


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