Historic Lows in Altcoin Market: A Bullish Indicator?

The altcoin market has had a disastrous 2022 and a neutral but hopeful first half of 2023. Long-term indicators of altcoin’s strength against Bitcoin are at historic lows today.

According to long-term data from the Altcoin Season Index, the altcoin market has dropped to levels last seen in 2019-2020. This information alone does not make altcoin holders optimistic. However, historical data shows that these lows preceded the exponential bull market of the TOTAL2 chart, which began in late 2020.

Altcoin Market at 2019-2020 Lows

Data about the potential altcoin season by BlockchainCenter expresses the relationship between the growth of the price of Bitcoin (BTC) relative to the growth of the price of the TOP 50 altcoins. If the BTC price is increasing more (or decreasing less) than the prices of the top altcoins, this suggests an ongoing Bitcoin season (values below 25). On the other hand, if the BTC price is declining more (or increasing less) than the altcoins, this is a sign that the altcoin market is dominant (values above 75).

Naturally, most of the time, the chart runs in the neutral range between 25 and 75. This indicates that neither the Bitcoin market nor the altcoin market currently dominates the cryptocurrency sector.

Moreover, the Altcoin Season Index contains 3 time frames: monthly, quarterly (seasonal), and yearly. And it is in the latter, the long-term one, that today we can see a clear Bitcoin season and the decline of the altcoin market to historical lows (blue areas).

We see above that the altcoin market dropped to historic lows back in January 2019. However, it bounced back soon after, only to plunge again and start a long-term accumulation. It lasted from May 2019 to June 2020.

Extrapolating this 13-month period to today’s market conditions, it can be assumed that the altcoin market will remain at these lows until September 2024. If this were to happen, the altcoin bull market would start about six months after Bitcoin’s halving. Which, according to the latest data by BuyBitcoinWorldwide, is forecast for April 17, 2024.

It is worth mentioning that only 5 altcoins from the TOP 50 of the market capitalization ranking can boast higher returns than BTC in the last year. These are INJ (242%), XDC (68%), XRP (56%), BCH (50%), and LTC (25%), respectively. Bitcoin, meanwhile, saw a 14.3% increase, outpacing all other 44 altcoins.

TOTAL2 in Long-Term Accumulation

The above predictions stay in confluence with the previous cryptocurrency market cycle events. If we look at the long-term chart of the altcoin market total capitalization (TOTAL2), we see fractal similarities between the cycles.

In 2017, the altcoin market experienced an exponential bull market, which took TOTAL2 to a peak of $474.50 billion in January 2018. The market then declined sharply for 12 months until bottoming out at $36.75 billion in December 2018.

The macro bottom marked the end of the bear market and initiated long-term accumulation. Its main phase was between May 2019 and June 2020 (green area). According to the Altcoin Season Index, This period corresponds to the range in which the altcoin market was at historic lows against Bitcoin.

Immediately after that, the mature phase of the bull market began. TOTAL2 surged again exponentially and reached an all-time high (ATH) of $1.71 trillion in November 2021.

Further down the line, history rhymed again, and the altcoin market lost about 75% of its value. Falling to a bottom at $427.57 billion in June 2022. 6 months later, TOTAL2 approached that bottom (blue circle) again, forming a bullish double-bottom pattern.

The revival and bounce we have seen since early 2023 initiated the accumulation phase or early stage of the bull market. However, the altcoin market only this month dropped to historic lows against BTC. If the accumulation phase continues again for another 13 months, the start of the mature phase of the bull market can be predicted for around September 2024.

This means that altcoin holders still have a long way to go to make profits comparable to previous cycles. However, on the other hand, it provides more opportunities to build a long-term portfolio that can yield impressive returns during the next bull market.

For BeInCrypto’s latest crypto market analysis, click here.