Following the recent wave of sell-offs in January, altcoins may be gearing up for a strong recovery, potentially overshadowing Bitcoin [BTC]. Alphractal, an analytics platform, indicates that the Altcoin Season Index has reached a critical juncture, setting the stage for a potential short-term comeback in the sector.
In a recent update from the firm, it was noted that, “With Bitcoin’s price climbing from 89k to 97k over the last 24 hours, the Altcoin Season Index hints at a forthcoming revival in altcoins.”
An analysis of the attached chart illustrates that the Altcoin Season Index has historically bounced back each time it hit the lower boundary. Notably, this rebound typically trails Bitcoin’s movement. Therefore, the recent surge from below $90k to $97k could catalyze a similar resurgence in the altcoin market.
Forecast for Altcoins Moving Forward
It is important to highlight that another widely-used altcoin performance indicator from Blockchain Center currently stands at a neutral level. This suggests that the market is at a crossroads, with the potential to shift in any direction from this point onward.
Nonetheless, Bitcoin currently holds a strong position, especially in anticipation of potentially positive developments in the crypto sphere following the inauguration of Donald Trump on the 20th.
Looking ahead, we delve into the dominance of BTC and Tether’s USDT for additional insights into the altcoin market. Both these metrics exhibit an inverse relationship with altcoin momentum, where a decline in BTC and USDT dominance signals a likely shift of capital from Bitcoin to altcoins, accompanied by increased buying pressure.
A similar scenario was observed during the altcoin rally in November, coinciding with a decrease in BTC and USDT market dominance.
Presently, BTC.D is facing resistance at a trendline, while USDT.D shows indications of a potential decline. Should both these indicators retreat in the coming days, the projection by Alphractal could be validated.
Despite the current scenario, certain leading altcoins like XRP and Hedera (HBAR) have surpassed Bitcoin’s performance. Over a 90-day period, XRP and HBAR have recorded remarkable gains of 450% and 600%, respectively, compared to BTC’s 52% increase during the same timeframe.