Despite the absence of a strong altcoin season, some experts remain optimistic about a potential robust recovery in the near future.
Mathew Hyland noted that the fact that altcoins did not experience a significant decline after Fed Chair Jerome Powell dismissed an aggressive rate cut and Quantitative Easing (QE) indicated a possible bottom formation.
“Had someone predicted yesterday that Powell would announce delaying QE until rates hit zero, many would have expected a substantial sell-off revisiting previous lows or establishing new lows. However, neither scenario unfolded; signs suggest a bottom has been reached.”
Hyland further suggested that the pessimistic outlook projected by the Fed might have already been factored into the market during the recent downturn, and current sellers might have exhausted their positions.
Altcoin Season Index Reaches a Critical Level, Yet…
Over the past months, most alternative coins have witnessed a depreciation ranging between 20% to 90% since late January, with some notable performers erasing the gains achieved during the ‘Trump pump’ of November. Consequently, this consistent decline has pushed the altcoin season index to a crucial position when compared to Bitcoin (BTC).
While historical data typically indicates a potential upturn within this range, several other variables need to be taken into consideration.
One significant factor is the saturation of tokens vying for market liquidity, which poses a challenge for a holistic recovery across the broader altcoin spectrum.
Therefore, it is likely that only specific tokens may witness a substantial recovery if an altcoin boom occurs.
Additionally, a notable risk factor lies in the high dominance of Bitcoin (BTC.D). Since December, BTC.D has surged from 55% to over 60%, further draining liquidity away from altcoins.
During the same period, the altcoin market has experienced a significant contraction of almost $40 billion, reducing its overall size from $1.64 trillion to $1.25 trillion.
Nevertheless, not all altcoins have been impacted equally by this downturn. Coins such as MANTRA [OM], Litecoin [LTC], and Hyperliquid [HYPE] have witnessed substantial gains in the double and triple digits in the last thirty days.