Cryptocurrency traders are observing various indicators that suggest a bullish trend for altcoins, potentially signaling the beginning of an “up-only season.” Analysts have noted that key metrics and chart patterns are aligning to forecast a strong period ahead for altcoins, despite Bitcoin’s current dominance in the market. One notable observation comes from a pseudonymous analyst known as Moustache, who highlighted the formation of a bullish pattern on the Altcoin Season Index. This pattern, an inverse head-and-shoulders (IH&S) chart pattern that has been developing over 3.5 years, signifies a potential shift in the market where altcoins may outperform Bitcoin, signaling an upcoming “altcoin season.”
Although the Altcoin Season Index currently stands at 39, indicating that only 39% of the top 50 cryptocurrencies by market capitalization have outperformed Bitcoin over the last 90 days, for a full-fledged altcoin season to be declared, this figure needs to rise to 75%. Additionally, analysts are closely monitoring the stochastic relative strength index (RSI) for further insights. The stochastic RSI has recently produced a bullish crossover on the three-week chart, a signal that independent analyst Titan of Crypto believes could precede a major rally for altcoins. Historical data suggests that such crossovers have been followed by powerful upward moves in altcoins, further supporting the potential for an altcoin season.
The ongoing recovery in altcoins is also reflected in the broader market capitalization of cryptocurrencies excluding Bitcoin and Ether, referred to as TOTAL3. Data from TradingView shows that the market cap for TOTAL3 has increased by 19% from a low of $516.7 billion in early September to a recent high of $617.8 billion in early October. While there has been a slight pullback, TOTAL3 remains above a key support zone, indicating positive momentum in the altcoin market. Traders have booked profits as the RSI on the daily chart approached overbought levels, suggesting temporary overvaluation, but the RSI has rebounded, supporting the idea of a continued uptrend for altcoins.
If TOTAL3 maintains its position above the major resistance zone, analysts believe that altcoins could continue their recovery and potentially enter into the much-anticipated altseason. The optimism surrounding a potential altcoin season is further fueled by the formation of bullish patterns and indicators, including the IH&S pattern on the Altcoin Season Index and the bullish crossover on the stochastic RSI. These signals suggest that Bitcoin’s dominance may be weakening, paving the way for smaller cryptocurrencies to outperform and leading to a period of significant growth for altcoins. Traders and analysts are closely monitoring these indicators to anticipate and capitalize on potential market movements in the coming weeks.
