Market expert Lark Davis recently took to social media to claim that the long-awaited altcoin season is far from over despite the short-term corrections and challenges facing the broader crypto market.
Davis believes there are significant opportunities ahead for altcoins, especially since their total market capitalization (excluding Bitcoin and Ethereum) is around $1.05 trillion.
Key factors for the imminent altcoin season
the expert points out that the current altcoin market capitalization is approaching its previous high of $1.13 trillion from November 2021. Recall a similar scenario from February 2021, when the altcoin market capitalization tested the January 2018 highs before breaking up.
This breakout resulted in an impressive rise from $360 billion in February 2021 to $1.13 trillion in November 2021, an increase of over 200%. Davis strongly believes that once the altcoin market capitalization once again surpasses the $1.13 trillion threshold, we could witness one of the largest altcoin seasons in the history of cryptocurrencies.
Several key factors Contribute to Davis’ optimism regarding the imminent rise of altcoins:
- Bitcoin performance: Currently at all-time highs, Bitcoin’s price strength often catalyzes interest in altcoins.
- Political transition: With Donald Trump taking office in just 34 days, market sentiment may lean favorably towards cryptocurrencies.
- Global rate cuts: Central banks around the world are reducing interest rates, which typically increases liquidity in the market.
- Higher capital investment: An influx of cheap capital is making its way into the cryptocurrency space, setting the stage for potential growth.
- Risk environment: Current market conditions are among the strongest for risk assets, creating an ideal context for investing in altcoins.
Rally expected as Bitcoin dominance increases
Echoing Davis’ sentiments, cryptanalyst Miles Deutscher emphasize that the real altcoin season has not yet begun. He points to compelling historical evidence suggesting that alternate seasons are not mere coincidences but distinct seasonal phenomena supported by statistical patterns.
Historically, Ethereum (ETH) has shown impressive performances from January to May, often outperforming Bitcoin during this period. During these months, Ethereum averages around 28% monthly returns, compared to just 3% during the rest of the year.
Furthermore, the analyst states that the current environment is especially favorable for this rotation, since Ethereum It has historically outperformed Bitcoin by approximately 20% monthly during alternate seasons.
As Bitcoin’s performance strengthens, so does the likelihood of capital flowing into Ethereum and other altcoins. This rotation is already observable in the recent rise of Bitcoin. domainwhich has mirrored patterns seen in previous alternate seasons around 2017 and 2021.
At the time of writing this article, ETHthe largest altcoin on the market, is trading at $3,686, down 4.4% over the 24-hour period and down almost 6% over the week.
Featured image of DALL-E, chart from TradingView.com
Fountain: NewsBTC.com
