- The altcoin market has performed well over the past five months, but halving fears kept it under wraps.
- It may take some time before the next such run materializes, but it will leave telltale signs.
The altcoin market has lost a lot of value over the past month as fear swirled around a Bitcoin [BTC] halve.
Prominent crypto analyst Ali Martinez noted on X (formerly Twitter) that altcoin seasons start shortly after Bitcoin’s halving.
An alt season is when the market cap of altcoins multiplies. Given the way capital rotation would work in the crypto world, this typically doesn’t last more than a few months.
Still, it offers investors a great opportunity to make a profit.
Is a new altcoin season just around the corner?
The altcoin seasonal index reached above 75 in early 2024. During the halving event, the index fluctuated to a value of 25 to reflect Bitcoin season, but in reality altcoins lost much more value than Bitcoin over the past month.
This was a result of the fear of selling pressure behind Bitcoin. At the time of writing, the index stood at 39, which did not reflect an altcoin season.
Source: USDT.D on TradingView
Technical analysis of the Tether [USDT] The dominance chart showed that the downtrend was almost over.
The USDTD downtrend is a good sign as it indicates that investors are taking risks and trading stablecoin for crypto assets.
The uptrend of a USDT dominance would show the opposite.
That is why we want a strong downward trend in an altseason. The Directional Movement Index on the 3-day chart showed a downward trend from late October to early April.
This was a significant amount of time and suggested that the market would need time to reset before the next downtrend. Additionally, the cyan boxes highlight the BTC halvings in 2020 and 2024.
If the 2020 similarities play out, we could see altcoins lose more value in the coming weeks.
Purchasing power on the market increased
AMBCrypto’s analysis of CryptoQuant data showed purchasing power trending higher since mid-October. The exchange reserve of stablecoins is a reflection of the purchasing power in the crypto market.
Comparing it to the 2020-2021 period, the metric has not yet gone parabolic as it did in the previous cycle. The massive expansion of market capitalization in 2021 caused foreign exchange reserves to rise dramatically.
Read Bitcoin’s [BTC] Price forecast 2024-25
Therefore, another rapid increase in stablecoin reserves would be an indicator that another altcoin season is just around the corner.
Combining it with the Tether dominance chart and the altcoin seasonal index could give investors an edge in the markets.