Why the start of a new Altcoin season is very close

The total altcoin market cap is in a consolidation dating back to mid-2022. Technical indicators are currently suggesting the possibility of a breakout, which could ignite a new altcoin season.

Still, this will require new capital inflows, increased altcoin trading volume, and a sustained close above a critical resistance area.

Altcoin market cap is increasing

The altcoin market cap is in the process of forming its fourth consecutive weekly green candle. Each candle had a body size of about 6%, but together with the fuses it represents a price increase of 35% over the past month.

This upward move is significant, pushing the altcoin market cap into long-term resistance territory at $657 billion. This crucial resistance barrier has existed since mid-2022, and even acted as support several times during the 2021 bull market.

The altcoin market cap also formed triple bottom support at $494 billion, creating a solid structure for a potential bull market. Indeed, the first higher high in 1.5 years was created in April, while June, August and October managed to hold a higher low at the support zone.

If the altcoin market cap continues to increase, it will not only break out of the long-term resistance area, but also generate another higher high. This could potentially confirm the start of a new bull market on the long-term chart.

Read more: 7 cryptocurrencies you must have for your portfolio before the next bull run

It is worth noting the declining trading volume, which has been falling since mid-2021. The compression pattern looks very mature, so a breakout can be expected in the coming weeks or months. A breakout above resistance and the generation of a higher high with rising volume would be additional confirmation of the start of a new altcoin season.

Bullish readings are also provided by the Relative Strength Index (RSI), which is rising and approaching bullish territory above 70. As the RSI reaches the highest level since November 2021, it further confirms the change in market sentiment.

A Bullish Breakout After a brief correction

The analysis of the daily interval supports the bullish outlook from the weekly time frame. First, the altcoin market cap hit resistance at $657 billion. A short-term consolidation and possible correction can be expected here.

If the correction is shallow, it is possible to retest the previous resistance area at $608 billion and validate it as support. This level corresponds to the 0.382 Fib retracement of the recent up move.

The daily RSI is already in overbought territory, above 70 on the daily chart. However, this has not yet generated a bearish divergence, as a steady increase in the RSI accompanies the price rise.

Interestingly, unlike on the weekly chart, the first signs of an increase in trading volume are already visible. The descending resistance line has been in place since March and has been broken several times in the past few days. If this trend continues, it may soon become visible in the weekly trading volume.

Altcoin Season: The Cash Flow Cycle

Noted crypto analyst Stockmoney Lizards said, “Altcoin season is around the corner.” His analysis considers how altcoin market capitalization increased after Bitcoin’s previous halving. In his opinion, the altcoin market capitalization reached the peak of the cycle at 505 days after the Bitcoin halving.

If this situation were to repeat itself, the current price action could just be a prelude to a 4x to 8x altcoin season, which the market may not experience until 2024 – 2025.

Read more: Bitcoin Halving Cycles and Investment Strategies: What to Know

During the highly anticipated altcoin season, another analyst, Crypto clearly highlights the standard money flow during a crypto bull market. The standard pattern begins with the rise of Bitcoin. Then the main beneficiary becomes Ethereum.

Later, capital flows into more altcoins, from those with large market caps to medium to small caps. When the last and smallest altcoins increase exponentially, it signals the end of the altcoin season.

In addition, Crypto Bitcoin Chris complements this scheme with the direction of progression during the altcoin season, independent of market capitalization.

In his opinion, the freshness of the project also plays a big role, because usually the market promotes projects that represent innovative technology at the beginning. They are the leaders of every market cycle.

This is followed by the emergence of less popular altcoins, which still have a high quality and hold value against Bitcoin.

The end of the altcoin season is marked by the growth of old projects, which are often considered “dead”. Every project, even “junk” projects, ramps up in this phase.