Despite recent moderate gains, altcoins have appeared to take a step back in the past 24 hours. Nevertheless, the potential for an upcoming altcoin season remains a distinct possibility.
Such a scenario is evident as the altcoin market capitalization chart mirrors patterns observed in previous market cycles.
What is the Current Situation for Altcoins?
Key altcoins such as Ethereum [ETH], Binance Coin [BNB], and Solana [SOL] have experienced price corrections over the last day. According to data from CoinMarketCap, prices for these tokens dropped by 2.5%, 3.5%, and 4%, respectively, in the previous 24 hours.
Even meme coins did not escape unscathed, with Dogecoin [DOGE], the largest meme coin globally, seeing a decline of over 5% during the same timeframe.
Interestingly, it wasn’t just altcoins facing corrections; even the dominant cryptocurrency, Bitcoin [BTC], displayed signs of a market correction.
Recent reports highlighted that BTC’s MVRV ratio had reached historic levels, typically preceding price corrections in the past.
Nonetheless, this recent downtrend could be a temporary setback and a favorable opportunity for investors to acquire tokens at a reduced price. Notably, a prominent crypto analyst known as Moustache shared a tweet outlining a compelling pattern.
According to the tweet, the altcoin market capitalization chart is resembling trends from previous altcoin seasons in 2016 and 2020. On both occasions, significant altcoin rallies followed similar patterns, indicating the likelihood of history repeating itself.
Moustache’s tweet also hinted at the potential for altcoins to gain momentum rapidly in the weeks or months ahead.
The altcoin season index showed a decline after peaking at 88. Currently, the index stands at 71. With the figure still hovering near 75, the prospect of an imminent altcoin season cannot be outright dismissed, especially when considering the patterns from 2016 and 2020.
Forecasting the Trajectory of ETH, SOL, BNB
Despite historical indications pointing towards an impending altcoin season, major altcoins failed to respond in line with expectations, as previously noted. Recent price corrections have also impacted their social metrics.
ETH, SOL, and BNB saw significant decreases in their weighted sentiments, indicating an increasing bearish sentiment surrounding these assets in the market.
Data from Coinglass unveiled another bearish metric for these cryptocurrencies. Their long/short ratios witnessed notable drops within the 24-hour timeframe. A decrease in this metric typically signifies an increase in short positions compared to long positions, often indicating an impending price decline.
While these metrics may suggest further price drops, the unpredictable nature of the cryptocurrency market means nothing is certain. Past trends and market unpredictability could potentially surprise investors and pave the way for altcoin rallies in the coming weeks.