Technical indicators and historic observations give muted signs of an upcoming altcoin season. The altcoin market cap has established a new uptrend after being supported at the 21-moving average. Now that the market cap is testing the previous halving year’s market cap levels, there could be a parabolic altcoin season if history repeats
Market cap recovers after 3 months
The altcoin market cap has been on a downward trend since October. For the past 3 months, the altcoin market cap was not able to cross above the 21-day moving average, despite multiple attempts. However, the alt market cap has now crossed above this short-term technical indicator, which is a good bullish signal.
This level, which was acting as a resistance level, has now turned out to be a support level, which is holding the newly established uptrend intact.
Altcoin Season Index gives subtle hints
Moreover, technical indicators are also signaling an upcoming alt season. The Altcoin Season Index (ASI) has established a new uptrend, rising from 41 to 55, closer to the altcoin season territory, which begins at 75 on the ASI scale. The ASI is a technical indicator that gauges the top 50 tokens, excluding stablecoins. If 75% of the top 50 tokens outperform Bitcoin for 90 days, it is considered altcoin season.
Based on historic observations, the altcoin season springs into action when the market cap retests the previous year’s halving level. For instance, the 2020-2021 altcoin season broke out once the market cap retested the 2016-2017 levels. As the market cap is retesting the 2021 halving levels, there might be an explosive altcoin season coming.
Technically, the altcoin market cap has crossed above the 21-day MA, which is a good sign. On top of that, the ASI indicator has also headed into the altcoin season territory, pointing towards a potential alt season. And to add icing to the cake, historic data also shows that the market cap is at a critical point where it could explode.
Given that the altcoin season comes into play, not all altcoins will gain value. Those altcoins that have potential and have a solid vision and proper use cases will be the ones that attract the attention of the traders.
