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Traders Forecast Massive Rally For Altcoins, But Why Is Sentiment “Down”?

Bitcoin’s correction at the start of Q2 dragged down the Altcoins market, and a “gloomy” sentiment appears to surround investors despite Q1 2024 registering one of the best performances for the crypto market. As prices recover momentum, traders and analysts suggest a brighter future might be around the corner.

Altcoins Next Stop: Altseason?

On Friday, some traders shared optimistic forecasts for altcoins. According to investor Crypto Jelle, the altcoin market cap chart “looks primed to go on a massive rally in the coming months.”

The investor highlights the similarities between the altcoin’s performance during the previous bull runs. Per the chart, after 2018’s all-time high (ATH) of $474.5 billion, the altcoin market consolidated under the resistance zone in “preparation” for the next bull run.

Altcoins, crypto

During the 2020-2021 bull market, altcoins’ market cap broke out and consolidated around a new support zone before continuing its upward trajectory to its last ATH of $1.7 trillion.

As the investor highlighted, altcoins’ performance looks like that of the previous bull run. They are seemingly consolidating after a breakout from the resistance zone. If history were to repeat itself, then altcoins could “remind everyone what they’re capable of.”

Another trader and analyst, Titan of Crypto, shared a similar prediction to Jelle’s. According to the analysts, he’s seen crypto community members believing that “there’ll never be another altseason.”

To those in doubt, the trader suggests they “zoom out” to get a broader perspective on where the market is in the cycle. Per his chart, which excludes Ether (ETH), altcoins are at the “2 bullish monthly candles followed by consolidation” phase.

altcoins, crypto

The chart also suggests that the subsequent run-up could surpass the $1.13 trillion ATH and soar to a market cap of $3.25 trillion in the coming months. To the analyst, the “#Altseason2024 is inevitable.”

Predictions Are Up, Why Is The Sentiment Down?

Across different platforms, the sentiment seems to lean towards “negative” despite the optimistic forecasts. Follis, content creator and founder of Chroma Trading shared his experience on X this Thursday.

According to the post, “sentiment at the moment is some of the worst” he’s seen during his years in the crypto community. Moreover, he considers “engagement is dead” as “everyone is quiet” across X, Discord, and Twitch.

The post opened a discussion as to what could be the reason. Follis suggested a combination of “over-leveraged top longers” and “traders who expected price to go up indefinitely.”

Another user weighed in, suggesting traders lost significant money buying high and selling low on Solana and Base memecoins.

Top crypto trader Ansem joined the discussion, disagreeing with the “depressing” take on the current market. The trader pointed out that BTC was at $70,000 and ETH at $3,500 at the time of his post. These prices represent a 129.8% and 82.5% increase in the past year.

Similarly, he highlighted the performance of SOL compared to the bear market bottom and the remarkable performance of memecoins in the past six months. Many users agreed that drawdowns are usual during market cycles and ultimately suggested looking at the bigger picture.

Altcoins, market cap

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Ethereum Recovers From Dip: ETH Hits $3,900 For The First Time In Two Years

After Bitcoin (BTC) recorded a new all-time high (ATH), Ethereum (ETH) rallied above $3,800 before the price crashed over 10%. The second-largest cryptocurrency has recovered from the dip and reached $3,900 momentarily for the first time in over two years.

Ethereum Recovers And Rallies to $3,900

On Thursday, Bitcoin reached a crucial milestone after breaking above $69,000 and recording a new all-time high (ATH). Before the euphoria was over, the flagship cryptocurrency’s price started to drop, trading as low as $60,000. Since then, BTC’s price has recovered to hover between the $66,000-$67,000 price range.

Fueled by the bullish sentiment, Ethereum rallied above $3,800 before suffering a considerable price drop. The ‘king of altcoins’ lost momentum and shredded about 12% of its price to trade at a price as low as $3,360, according to CoinMarketCap data.

After the dip was done, ETH started to show a recovery alongside Bitcoin. As reported by NewsBTC, a crucial resistance level to clear during this recovery was $3,600. Ethereum surpassed this support level and has maintained its price above the $3,800 range during the last 4 hours.

Ethereum reached the $3,800 support level twice in the last 24 hours. This price range was not seen since January 2022, and the regained bullish momentum propelled the token’s price to a higher milestone.

Ethereum hit $3,900 for the first time since December of 2021. The biggest altcoin briefly soared to $3,901 before falling to the $3,850 price range.

At the time of writing, ETH is trading at $3,834, representing a 1.6% price drop in the last hour and a 2% increase from 24 hours ago. Similarly, the token exhibits green numbers on longer timeframes.

ETH, ETHUSDT, Ethereum

Ethereum’s price performance has surged almost 16% in the past week, 65% in the last month, and an impressive 145% in one year.

ETH’s market capitalization increased 1.55% to $459.7 million on the last day. Its daily trading volume has increased by 58%, with $52.16 billion in market activity in the previous 24 hours.

What’s Next For ETH’s Price?

Many analysts have forecasted that ETH’s rally is far from over. Analyst Altcoin Sherpa predicted that Ethereum could reach $4,000 when it breaks through the $3,000 price barrier.

Ethereum’s rally seems to be fueled not only by Bitcoin’s momentum but also by the general market dynamics. The date for the Dencun upgrade is approaching, and this update is expected to bring several technical improvements to Ethereum’s infrastructure,

Moreover, the possibility of Ether-based spot exchange-traded funds (ETF) being approved by the US Securities and Exchange Commission (SEC) in May has built expectations for Ether and the blockchain’s ecosystem.

Pseudonym trader Ash Crypto suggested to his Telegram subscribers that the price correction experienced after Bitcoin’s new ATH was not a “reason to panic.”

altseason, ETH, Bitcoin, altcoins

Related Reading: Ethereum Price Follows Bitcoin Surge, Why $4K Is Just A Matter of Time

The trader considers that the “late long flush to cut all the leverage” was expected and that a soon-to-come stabilization in BTC’s price will propel the run of ETH and all altcoins. Similarly, he announced the ‘incoming alt season’ after the price of ETH hit $3,900 and suggested that Ethereum’s next support level will be $4,200.

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Is Altcoin Season On? Here’s What Glassnode Data Says

Here’s what the “Altseason Indicator” from the on-chain analytics firm Glassnode says regarding if an Altcoin season is currently going on or not.

What Altseason Indicator Says Regarding The Altcoin Season

In its latest weekly report, Glassnode has discussed what the Altcoin season status for the cryptocurrency market has looked like recently. To check whether the “altseason” is on, the analytics firm has devised its Altseason Indicator.

This metric judges if the investors are in a risk-on mode based on how capital rotations are occurring in the sector. There are two conditions the indicator checks for.

First, the Altseason Indicator looks at the capital netflows involving the three major asset classes in the sector: Bitcoin (BTC), Ethereum (ETH), and stablecoins.

For the former two assets, netflows are gauged using their “realized caps.” The realized cap is a capitalization model that calculates any asset’s total valuation by assuming that the real value of any token in circulation is the price at which it was last moved rather than the current spot price.

The last transfer for any coin was likely the last point at which it changed hands, so the price at the time of that transaction would be its current cost basis. As such, the realized cap sums up the cost basis of every holder in the sector.

Put another way, the realized cap measures the actual amount of capital the investors have put into the asset. Thus, changes in the metric would reflect the amount of capital flowing into or out of the asset.

For the stablecoins, net flows can be judged based on the supply or market cap alone, as the stables’ value remains tied to $1 at every point, so the magnitude of the market cap and realizes cap would be equal (both of these would also equal the supply, except for the unit).

For the Altcoin Season to be active, all three asset classes should have positive netflows. This is because capital generally enters the cryptocurrency sector through these coins and only then rotates into altcoins as investors’ appetite for risk rises.

The other condition the Altseason Indicator checks for is the momentum in the altcoin market cap itself. In particular, the metric confirms whether or not the altcoin market cap is currently over its 30-day simple moving average (SMA).

Altcoin Season Indicator

The chart shows that the Altseason Indicator first started flashing the risk-on signal in October of last year. However, the signal turned off when the market cooled off following the launch of the Bitcoin spot ETFs.

After staying off for 22 days this month, though, the Altseason Indicator seems to have been saying that the Altcoin season is back on.

BTC Price

At the time of writing, Bitcoin is trading around the $50,900 level, down 1% in the past week.

Bitcoin Price Chart

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The Year Of Alt Season: Altcoins Dominate Market In 2021

Bitcoin has had a favorable year in 2021 but the altcoins have dominated the market. The advent of the alt seasons this year had seen multiple altcoins rally towards new highs even when market-mover bitcoin had remained stagnant at times. This move, coupled with the growth and adoption that rocked the crypto space this year, has proven that the altcoins dominated the market on a large scale.

Altcoins Rule 2021

So many new things came out of the altcoin industry this year and have found success at the same time. Basically, the year 2021 has been one long alt season when we look at the performance of some of these assets.

Related Reading | The Year In Review: An Emotional Rollercoaster For Crypto Investors

A lot of this growth has been driven by decentralized finance (DeFi), NFTs, and most recently, the metaverse gaining popularity among investors. These have brought to the forefront some interesting projects that have had their tokens rally because of it. Most of the time, they followed the growth of bitcoin. While at other times, these assets broke free and rallied on their own accord.

Altcoins market cap at $1.32 trillion | Source: Altcoins Total Market Cap on TradingView.com

This has led to bitcoin losing a significant portion of its market dominance to altcoins. Starting the year out at about 75% of total market dominance, it has now fallen to 38% where altcoins have continuously eaten into the pioneer cryptocurrency’s market share. Ethereum was, as always, leading this charge as it took the largest chunk of the market share.

Memecoins also found favor in the market this year. Coins like Dogecoin and Shiba Inu grew into the thousand and million percentile, as well as “ETH killers” also making a play in the market.

Mid-Caps Take The Lead

Altcoins always showed out in the indexes with triple-digit gains for the year. Bitcoin which had a tremendous run of it this year still recorded the lowest gains being the only index that returned double-digit gains. All other indexes, the small, mid, and large cap indexes enjoyed the majority of the gains.

Related Reading | Bullish Signal? Ethereum Market Dominance Sitting Above 20%

Bitcoin’s returns for the year only came out to 73%. While this is still vastly ahead of top investment vehicles like gold, the S&P, and NASDAQ, it still performed poorly in comparison to the other indexes.

Mid Cap Index records highest returns of 2021 | Source: Arcane Research

The Large Cap Index saw the second-lowest returns with 179%, but even it saw returns over 100% higher than that of bitcoin. The Small Cap Index made a splash with returns reaching as high as 485% for the year.

Finally, the Mid Cap Index came out as the winner for 2021 marking returns of 830%. This index consists mostly of Layer 1 tokens which had seen some of the most gains for the year, outperforming even ethereum despite its massive 485% returns for the year.

Featured image from Investment U, charts from Arcane Research and TradingView.com