Although the recent bitcoin price crash has sent several Altcoins into free fall, with declines ranging from 30% to 70%, there seems to be a ray of hope willing to shine in the darkness.
The recent bitcoin halving in April is what the altcoin market needs to recover and surpass its all-time highs.
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bitcoin Halving: A Gateway to Altcoin Prosperity?
bitcoin typically undergoes a halving every four years, and this important event halves the block reward for miners. This drop in supply has typically triggered a bullish rally not only for bitcoin but also for the altcoin market.
Wise advice from cryptocurrency analysts x.com/wiseadvicesumit/status/1811396105986343249″ target=”_blank” rel=”nofollow”>elaborates that after every bitcoin halving, there is a pronounced potential for altcoins to rise. The analyst noted in particular:
I know when altcoin season is coming and I'll show you…Halving' Everything depends on it (…) When halving happens, after 1–1.5 years, btc's ATH hits and close to there, the boom of eth and other altcoins.
Historically, this Halving period has seen an explosion of attention towards altcoins, driving their prices higher due to concerns of bitcoin scarcity following this event.
For example, in the previous bitcoin Halving on November 9, 2021, major altcoins including ethereum (eth) and Solana (SOL), Polkadot (DOT), Avalanche (AVAX) recorded a new all-time high.
To put this into context, eth hit a high of $4,800 on November 10th, SOL also hit its new high of $250 5 days earlier, as revealed by Wise Advice, while DOT’s high of $55 occurred on the 4th of that month, and AVAX’s high of $144 occurred later that month, on the 21st.
How does the Alts point halving season work now?
As Wise Advice's post suggests, these patterns underscore a recurring theme: after the halving, money flows out of bitcoin and into altcoins, significantly boosting their market positions.
The analyst explained:
The more they buy, the higher the price goes. And this makes investors profitable. They sell a part and send it to ethereum and other tokens. The market cap of these is much smaller, so even $100M inflow can make a huge change (a month before the ATH, bitcoin MC was 2.5x bigger than ethereum). That’s why Solana and Polkadot’s ATH was 4-5 days faster. Then the money goes to even smaller Alts. And they start outperforming the big ones. The smaller they were, the bigger the growth was.
It is worth noting that this change is often reflected in the bitcoin Dominance Index, a metric that measures bitcoin’s market capitalization relative to the total market capitalization of all cryptocurrencies. As observed after the halving, a decline in this index indicates a growing interest in altcoins.
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bitcoin dominance now sits at 54.60%, a slight decline from the 55% it held earlier this month, according to TradingView. Notably, the fact that the index is still somewhat high, as it is still above 50%, suggests that the market still favors btc.
However, the recent drop could be an early sign of the emergence of an altcoin season. Analysts at Glassnode agree. x.com/Negentropic_/status/1811743865277227142″ target=”_blank” rel=”nofollow”>spotlinking current market circumstances to those of late 2020, when smaller stocks and riskier assets boomed, pointing towards an imminent altcoin season.
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Is rotation coming?
Yesterday we saw how twitter.com/hashtag/Nasdaq?src=hash&ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow”>#Nasdaq decreased >2% – while twitter.com/hashtag/IWM?src=hash&ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow”>#IWM rose >3%.
This is a clear indication of rotation towards riskier assets.
Will we see this too? twitter.com/hashtag/btc?src=hash&ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow”>#btc and twitter.com/hashtag/Alts?src=hash&ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow”>#Alts?
Well, in November 2020, we had a day like yesterday. The IWM skyrocketed and… photo.twitter.com/WG9pooRxh1
— Negentropic (@Negentropic_) twitter.com/Negentropic_/status/1811743865277227142?ref_src=twsrc%5Etfw” target=”_blank” rel=”nofollow”>July 12, 2024
Featured image created with DALL-E, chart by TradingView
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