Is Altcoin Season Over? Index Cautions Crypto Market Selloff Ahead

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As a seasoned researcher with years of experience in the volatile world of cryptocurrencies, I’ve seen my fair share of market fluctuations, bull runs, and bear markets. The recent drop in the altcoin season index from 65 to 61 is not just another blip on the radar for me, it’s a potential storm warning that should not be ignored.

The index measuring altcoin performance has plunged below key support points, suggesting that the current surge may be drawing to a close. As a result, the overall cryptocurrency market is experiencing a significant downturn, with Bitcoin‘s price dipping below $105,000 and major altcoins like Ethereum (ETH), XRP, Cardano (ADA), Dogecoin (DOGE) suffering even steeper declines. Some financial experts have begun issuing warnings about investing in altcoins.

Altcoin Season Index Tanks to 61 Levels

Today, the Altcoin Season Index, a tool that evaluates the performance of the top 100 cryptocurrencies based on their market capitalization, decreased by 4 points. According to information from Blockchain Center, this decline occurred due to the wider crypto market plunge, with the index falling from 65 to 61 today.

As an analyst, I observe that a score above 50 generally signals an ‘altcoin season’, and a score above 75 signifies a particularly strong one. For the market to enter this phase, it’s crucial that at least 75% of altcoins outperform Bitcoin. The recent downturn might suggest increasing attention towards Bitcoin, possibly influenced by broader economic factors or significant events such as regulatory shifts or institutional investment. Despite Bitcoin’s price dip below $105K, the correction among altcoins appears even more pronounced today.

Consequently, the influence of Bitcoin has recovered and is now approaching a significant resistance level. If it surpasses this trendline, it might signal the conclusion of the altcoin market boom, suggesting a shift in investment towards Bitcoin again.

Crypto expert Altcoin Sherpa has warned investors to exercise caution due to potential further volatility in the market, specifically concerning Bitcoin’s current price fluctuations. In a recent comment, Sherpa anticipates that the market will rise once Bitcoin finds stability, but if Bitcoin continues to drop to lower values, altcoins could continue experiencing pressure. Additionally, Sherpa advises traders to be mindful of using leverage in these unpredictable market situations.

Crypto Market Analysts Remain Hopeful

Despite the sharp fall in the altcoin season index, crypto market analysts continue to remain hopeful. Crypto analyst Michael van de Poppe has raised concerns about a potential bearish divergence in Bitcoin’s price action.

Even though there might be some hurdles ahead for Bitcoin, van de Poppe predicts a robust comeback for altcoins after Bitcoin experiences a period of consolidation. He proposes that while Bitcoin may encounter certain difficulties, altcoins could experience substantial growth once the primary cryptocurrency settles down and finds stability.

According to analyst Miles Deutscher’s prediction, the true altcoin season will occur between January and May 2025. In this timeframe, Ethereum (ETH) is expected to significantly outshine Bitcoin (BTC). Notably, ETH is forecasted to yield an average return of around 28% per month during this period, compared to a 3% return for the remainder of the year.

It’s evident there’s a recurring seasonal trend in Ethereum’s performance. Specifically, from January to May, its returns tend to increase significantly. This consistent rise, often referred to as “alt-season,” isn’t just a coincidence; statistical analysis reveals it repeats itself across multiple years.

Additionally, it’s been noted that historically, Ethereum has surpassed Bitcoin by around 20% each month during periods known as altcoin season. This suggests a movement of funds from Bitcoin to Ethereum. Moreover, investments into Ethereum ETFs have noticeably increased over the last few weeks. However, at this time, Ethereum finds it challenging to surpass the significant barrier of $4,000.

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2024-12-18 16:10