- Altcoins historically performed well about 10 months before Bitcoin’s halving.
- Investor sentiment is low, often a precursor to a market upturn.
- Fundamentals like Ethereum’s PoS shift and Chainlink’s CCIP indicate underlying strength.
The crypto market has long been a theater of dramatic highs and depressing lows, leaving many investors searching for clues on when to make their move. Historical data reveals that altcoins often enter a bull phase approximately 10 months before Bitcoin’s halving. As Bitcoin dominance appears to be peaking, experts suggest it won’t reach these levels again during this cycle, hinting at the perfect storm for altcoins to flourish.
Michael van de Poppe, the CEO and founder of MN Trading, an educational platform focusing on trading, recently tweeted insights about the current state of the Altcoin market.
The right time to buy #Altcoins might be now, or isn't it?
— Michaël van de Poppe (@CryptoMichNL) August 28, 2023
If you think about the previous cycle, you've seen altcoins running to a 10x, 100x, 200x or even more.
Most of them have been losing 90-99% of the valuation. Does that market come back or is it over? 👇
In… pic.twitter.com/VL1eS9tiBG
Sentiment analysis portrays an investor base battered by bearish trends for the last two years. Social media engagement rates have plummeted, Google search queries for cryptocurrencies have nosedived, and the overall buzz is at a cycle low. The remaining voices have weathered the bear market and often hold a skeptical outlook due to their bruising experiences. Such low sentiment often paves the way for a market reversal, as was witnessed in 2015 and 2019, approximately 10 months before Bitcoin halvings.
Beyond investor emotion, fundamentals give insight into the health and potential of these digital assets. One encouraging sign is that many fraudulent or weak projects have exited the stage, leaving only robust players. Ethereum, for instance, has transitioned to a Proof of Stake (PoS) mechanism, thereby introducing a deflationary aspect to its assets. The upcoming Ethereum ETFs based on futures are also a positive indicator. Chainlink has also made notable advancements with the introduction of the Chainlink Crypto-Information Protocol (CCIP).
Strong projects are continuously innovating despite the pricing narrative failing to keep pace. This disconnect often results in short-lived rallies, as jittery investors are quick to sell to stymie a robust uptrend. However, when the real market move materializes, latecomers will find it challenging to secure advantageous positions.
Price levels have been relatively stable in comparison to past cycles. Altcoins are holding ground better than before, possibly due to the fundamental shift. Ethereum’s correction rates, for instance, have been significantly lower this time, at only 20-30%, compared to much higher rates in previous cycles. Experts point to Ethereum’s shift from Proof of Work (PoW) to PoS as a contributing factor, as the deflationary model proves to be a more appealing investment strategy than a yearly inflation rate of 4-5%.
An analysis of the Market Cap Others Dominance also corroborates the positive outlook. It shows a clear bullish divergence and bottom, reinforced by a weekly bullish divergence—generally considered one of the strongest market indicators.
In conclusion, multiple factors suggest that the altcoin market is poised for a bullish run. The prudent approach for investors might be to accumulate positions gradually through dollar-cost averaging (DCA) and consider holding for at least two years to reap substantial rewards potentially.
