Having plummeted to levels below $800 billion earlier in the previous month, the collective altcoin market capitalization is now showing signs of recovery as October unfolds.
Specifically, in recent days, the global valuation of altcoin market capitalization has experienced a gradual rise, currently standing at $906 billion as of the present moment.
Is the Altseason Approaching?
During this trend, a cryptocurrency analyst identified as Moustache on X, has hinted at a possible arrival of an altcoin season.
In a recent analysis, Moustache pointed out that the Altcoin Season Index, which evaluates the performance of altcoins relative to Bitcoin, seems to be shaping a bullish Inverse Head & Shoulders pattern.
This particular pattern, often seen as a robust signal in technical analysis, is approaching a crucial breakout point, potentially paving the way for substantial movements within the altcoin market.
Moustache stresses that the upcoming weeks and months could offer significant profit opportunities, as the index finalizes its bullish structure and potentially triggers a trend reversal.
From a technical standpoint, an Inverse Head & Shoulders pattern is regarded as a positive indicator, typically indicating a shift from a downtrend. This pattern typically comprises three lows: a “head” situated between two “shoulders,” with the head representing the lowest point.
When the price surpasses the neckline formed by connecting the peaks of the two shoulders, it typically hints at a possible upward breakout. For the altcoin market, this breakthrough could signify a transition from the current consolidation to a more widespread surge, leading to substantial profits across different altcoins.
Aligning the observations of Moustache regarding the Altcoin Season Index with this pattern implies that the market sentiment might soon lean towards altcoins instead of Bitcoin, indicating a change in capital flow.
Nevertheless, despite the promising technical signals, it’s crucial to delve into individual altcoin performances to gauge the broader market direction.
Evaluating Altcoin Performance: Chainlink as a Case Study
Understanding the potential resurgence of the altcoin market entails examining specific altcoins like Chainlink (LINK), which holds a spot among the top 20 cryptocurrencies concerning market capitalization.
Despite a 5.5% drop in the past week, LINK maintains an overall optimistic stance, having surged by 16.3% over the previous month. Furthermore, LINK has displayed positive movements in the last 24 hours, witnessing a price increase of approximately 2% to reach $11.56.
An in-depth analysis of LINK’s fundamentals offers crucial insights into the coin’s market sentiment and activity. Data from Glassnode reveals a downward trend in LINK’s active addresses, a critical metric reflecting retail involvement.
Following a peak of 5,738 active addresses back in August, the number has fallen to around 1,809. This decline indicates a decrease in retail activity and engagement, which might mirror overarching trends in retail participation within the altcoin sphere.
However, the open interest in LINK paints a more positive picture. As per statistics from Coinglass, LINK’s open interest has risen by roughly 4%, reaching a value of $165.86 million.
The volume of open interest, tracking the total number of active positions on derivative contracts, has also surged by 31.96%, hitting $198.27 million.
This surge in open interest could signify a growing investor interest and confidence in LINK, potentially reinforcing the case for an impending altcoin season.