The historic metric serves as a buy signal, preceding a previous 6x Bitcoin price rally.
Renowned cryptocurrency trader Luke Martin notes that a buy signal that has not occurred at this low in more than three years suggests that altcoins may be in a prime accumulation phase during a developing altcoin season.
In an August 28th X post, Martin highlighted a significant development on the “alts buy signal” chart, which indicates buy signals for the overall altcoin market based on historical data.
When Bitcoin reached this point in the summer of 2020, according to Martin, the price “went vertical” in a six-fold increase that saw it rise from $10,000 to $60,000 in the second half of the year.
Citing this historical precedent, he suggests that there may be a chance for traders to take advantage of cheap altcoins before a potential market rebound, and that they may be at a “sell your house to buy more” stage right now.
Are Altcoins Really About To Surge?
Given the current barrage of negative sentiment in the market, an altcoin season may seem improbable, but other signs support the possibility of a rally.
In an X post on the same day, pseudonymous crypto trader Mags highlighted a significant technical development: the altcoin market cap chart has formed a falling wedge pattern.
This pattern, according to Mags, is a “bullish continuation pattern,” suggesting that once the price breaks out of the wedge, the prevailing trend may either continue or reverse.
The falling wedge pattern for the altcoin market suggests that a bullish breakout may be approaching. This is consistent with the views of other analysts who speculate that the altcoin market may be preparing for a big surge.
Michael van de Poppe, the founder of MN Consultancy, emphasized the size of the opportunity by saying that there is still 47% below the previous highs and that there is “so much on the tables to be made in the coming period.”
The #Altcoin market capitalization is still down 47% from the highs. There’s so much on the tables to be made in the coming period. pic.twitter.com/LopbpU5Uk8
— Michaël van de Poppe (@CryptoMichNL) August 25, 2024
When Is Altcoin Season Coming?
In the cryptocurrency world, people are still talking a lot about when the next wave of altcoins will arrive, especially in light of the state of the market.
With a score of 29, the Fear & Greed Index—a popular sentiment measure—is currently in a “fear” phase. This is a notable drop of 10 points from last week, according to alternative.me data, reflecting caution among investors.
Interestingly, the Bitcoin halving may be used as a guide to forecast the next wave of altcoin growth. CEO of CryptoQuant Ki Young Ju stated in an August 21st X post that previous post-halving rallies have usually begun in the fourth quarter (Q4) of each halving year.
In the last #Bitcoin halving cycle, the bull rally began in Q4. Whales won't let Q4 be boring with a flat YoY performance. pic.twitter.com/LIWH53OpkD
— Ki Young Ju (@ki_young_ju) August 21, 2024
Young Ju went on to say that he thought “whales will not let Q4 be boring with a flat YoY performance,” suggesting that big market moves are anticipated as the year draws to a close.
Given that the price movement of Bitcoin frequently influences the larger cryptocurrency market, these events may herald the arrival of an altcoin season as investors look for alternatives to Bitcoin.