In the wake of a significant correction in February, altcoins are beginning to flex their muscles, signaling a potential recovery in the cryptocurrency market. This resurgence has propelled the total crypto market cap upward, rebounding from the $3 trillion mark on February 2.
Despite the altcoin market cap experiencing a substantial dip after facing a rejection at $425 billion, crypto analyst Rekt Capital has pointed out that the altcoin market capitalization’s pullback is less severe than in previous downturns. This trend suggests that bulls might be gradually gaining ground in the altcoin terrain.
Rekt Capital’s technical evaluation highlights the significance of the $425 billion resistance level for the altcoin market, with a particular focus on the total market capitalization of altcoins outside the top 10. This analysis comes amidst a broader downtrend in the altcoin sector over the past week, a continuation of a more extended correction initiated in early January when the market cap reached a multi-year high of approximately $440 billion.
Despite a robust rejection at this pivotal level, the depth of the most recent retracement is significantly shallower than previous downturns. The current pullback represents around 50% from the $425 billion resistance, compared to the previous two significant downturns which saw steeper declines of 69% and 85%. This less severe retracement could potentially impact the future course of the altcoin market.
One key insight from this trend is the evident weakening of resistance at $425 billion, suggesting that the bearish momentum post-retracement across the altcoin market isn’t as strong as in previous cycles. Unlike prior cycles where heavy selling resulted in deeper drawdowns, the current market behavior indicates an increasing resilience.
What does this mean for the altcoin season? The analysis by Rekt Capital is in line with the expectations of investors who are eagerly awaiting the onset of the altcoin season. The relatively minor pullback from the $425 billion resistance level supports the notion that this altcoin season could be more promising than the past two cycles. Crypto analysts, including Rekt Capital, are eagerly predicting an altcoin season where profits in Bitcoin begin to flow into altcoins, outperforming Bitcoin.
In another analysis, Rekt Capital pointed out a recent rejection of Bitcoin dominance around 64%. However, history suggests that such rejections are typically temporary, with the real rejection around 71%. When Bitcoin dominance reaches this point, a repeat of history could result in a sharp rejection, ushering in a cycle-defining altseason. As of now, Bitcoin dominance remains robust, and a full-blown altcoin season is yet to emerge. Analysts like Benjamin Cowen suggest that the anticipated altcoin rally may be on hold, with Bitcoin continuing to absorb the majority of market liquidity. Until a clearer reversal in dominance is observed, altcoin investors may need to wait a little longer.
