Highlights:
- ETH/BTC movements have historically signaled key growth phases for altcoins, aligning with end-of-cycle market surges.
- Despite the bearish sentiment, historical patterns in 2020/21 show that altcoins surge after resistance levels in market cycles.
- Institutional investors have been present in past cycles, suggesting current market dynamics are consistent with historical trends.
Altcoins have consistently shown significant growth towards the end of cryptocurrency market cycles, particularly highlighted during the 2017 and 2020/21 periods. This trend is often preceded by parabolic movements in the ETH/BTC ratio, a crucial indicator of altcoin market strength.
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This is something for the “altcoins are dead” + “It’s all about memes” bros.
During the 2020/21 run, until TOTAL 3 didn’t break the complacency shoulder resistance (🛡️) the trending narratives were DeFi, governance tokens, oracles and few others while 90% of the altcoins were… pic.twitter.com/B2eY1HMYkd
— ZERO IKA 🗡️ (@IamZeroIka) June 14, 2024
Historical Patterns of Altcoin Growth
During the 2020/21 bull run, specific altcoin narratives, including DeFi, governance tokens, and oracles, dominated the market. Despite this, 90% of altcoins suffered significantly. The overall sentiment was overwhelmingly negative, with many doubting the possibility of an altseason or even a minor sector rise.
The TOTAL 3 index, which tracks the total market cap excluding Bitcoin and Ethereum, struggled to break the complacency shoulder resistance. This resistance level was crucial in determining the overall sentiment and potential for altcoin growth.
Moreover, ETH/BTC plays a key role in gauging altcoin strength. The parabolic move of ETH/BTC often signals the beginning of significant growth for altcoins. During the 2020/21 run, this parabolic move started only near the cycle’s end. This trend is consistent with previous cycles, where the vertical lines drawn on the charts clearly show this behavior.
Comparison with Previous Cycles
For those who missed the 2017 bull run, historical BTC pairs provide valuable insights. Komodo’s BTC pair, for instance, remained stagnant in 2017 before surging at the cycle’s end, coinciding with TOTAL 3 and ETH/BTC movements. Similarly, in 2021, TRX’s BTC pair saw exponential growth only after ETH/BTC initiated its parabolic move and TOTAL 3 approached the cycle’s end. Numerous other altcoins exhibit this pattern, moving significantly towards the end of the cycle, barring a predominant narrative that boosts their performance.
Institutional Influence
The notion that institutional involvement has fundamentally changed the game is also worth addressing. The smart money was present in both 2017 and 2020. Their influence has always been a part of the market dynamics. Consequently, the current market behavior aligns with historical patterns, indicating that institutions’ presence has not drastically altered the cycle’s nature.
Therefore, despite the rise of meme-driven narratives, historical data suggests that altcoins are not “dead.” Instead, they typically surge towards the end of market cycles, driven by significant moves in ETH/BTC and supported by broader market trends.
BTC Dominance Climb Slows, Signals Potential Altseason Ahead
Bitcoin’s market dominance is showing signs of slowing down, suggesting the potential onset of an altseason. Historically, every bull cycle has been accompanied by an altseason, and current market trends indicate a similar pattern might be emerging. As Bitcoin’s dominance hovers around 62.56%, the market is closely watching for signs of altcoins gaining traction.
– BTC dominance climb slowing down
– Never a bull cycle without an altseason
– First ever altcoin to have an approved ETF this summerAre you ignoring this anon? 👀 pic.twitter.com/Ea7lYbWd6N
— Crypto Nova (@CryptoGirlNova) June 15, 2024
In addition to these observations, the cryptocurrency market is abuzz with the news of the first-ever altcoin expected to have an approved ETF this summer. This development could significantly impact market dynamics, further fueling the anticipated altseason.
The historical context reinforces the expectation that a shift in dominance often precedes a surge in altcoin performance. The analyst notes that altcoins have seen substantial gains following a peak in Bitcoin’s market share during previous cycles.
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Disclaimer: Cryptocurrency is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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