Recent market trends show a significant shift towards altcoins, with 60% of the top performing cryptocurrencies for the week being altcoins. This marks a departure from previous cycles where memecoins dominated, with notable altcoins like Cardano [ADA] recording gains of over 25% in a week.
Despite the strong performance of altcoins, concerns arise as many of these coins approach historical resistance levels, raising speculation about a possible market correction. A recent example includes a wallet holder who spent 235 ETH to acquire 33.35M DOGE, highlighting the uncertainty surrounding market movements.
While the weekend is expected to bring positive momentum to altcoins due to weak hands selling off their Bitcoin holdings for profit, there are fears that the market may follow patterns seen in previous cycles.
Potential Delays in Altcoin Season Initiation
Historically, the initiation of an altcoin season or a memecoin supercycle often follows a peak in Bitcoin prices. This pattern emerges as investors exiting Bitcoin positions seek opportunities in high-market capitalization coins, driving liquidity towards altcoins.
DOGE notably surged in value between mid to late October, breaking a long-term consolidation phase while Bitcoin faced corrections during the same period. Conversely, Ethereum, the leading altcoin, struggled to gain traction as Bitcoin approached a key resistance level.
Despite Ethereum’s recent 16% weekly gain, indicating a potential altcoin season, there are concerns that continued Ethereum sell-offs for DOGE, as witnessed with a $500K ETH for DOGE trade near the $3K mark, may delay the initiation of the altcoin season.
Such sell-offs could potentially divert liquidity towards memecoins, triggering a meme coin cycle instead.
Likelihood of a Memecoin Cycle Dominance
Recent weeks saw DOGE outperforming altcoins with a substantial 20% weekly gain, driven not just by market dynamics but also by Elon Musk’s vocal support for Dogecoin. Musk’s influence, particularly after recent political events, has significantly contributed to DOGE’s rally.
Following sizable DOGE accumulations exceeding $800 million post-election outcomes, the memecoin witnessed a surge in price towards the $0.20 mark, further solidifying its position in the market.
Considering Dogecoin’s legacy status, it must maintain its momentum to uplift other memecoins within the market, especially as certain Solana-based memecoins continue to lag behind.
The upcoming week is poised to introduce market shifts, with memecoins currently holding an edge over altcoins. However, long-term trends may see a reversal, especially with forecasts of Bitcoin potentially breaching $80k in the future.