The top crypto asset successfully hit a new all-time high in 2020, but the promised altcoin season that should follow is nowhere to be found. And as Bitcoin’s momentum changes and a correction is overdue, the lack of strength in altcoins could see the total market cap for crypto excluding BTC halve from $ 200 billion to $ 100 billion.
This is why a short-term bearish pattern could cause current levels to collapse and re-test support, but also why the true alt-season is almost near and could ultimately lead to a market cap of $ 6 trillion .
2020 is the year of the bitcoin comeback, but the rest of the crypto is lagging behind
2020 was the year Bitcoin matured as a mainstream financial asset. Hedge funds are now moving gold into cryptocurrency, and companies are swapping cash for BTC to protect corporate treasuries from impending hyperinflation.
While Bitcoin is extremely optimistic and has recently expanded in part to the broader crypto market, pushing companies like Ethereum, Ripple and Litecoin to new heights.
During the last bull run, as soon as Bitcoin set a new record, the money flowed into altcoins so quickly that their value exploded. The rally dropped BTC dominance from a cliff and the crypto bubble began to fill with hot air.
Market participants who have been through this in the past expected lightning to strike twice for altcoins, but it would require a new all-time high in bitcoin first.
That moment is now in the past, but not only do alts not fail, but according to technical analysis there is also a risk of almost 50% collapse. However, the same specs suggest that this will be one of the last remaining fixes in the altcoin market before the true alt season is ahead of us.
Altcoins could retrace by as much as 50% to confirm support if wedge breaks down | Source: CRYPTOCAP-TOTAL2 on TradingView.com
The overall altcoin market capitalization, which is mainly made up of the top ten crypto assets including Ethereum, Ripple, Litecoin, Chainlink and more, has a declining structure. The ascending wedge pattern typically breaks down, resulting in a deeper drop.
Rejecting resistance that dates back to the beginning of the altcoin bear market could cause the alt market to tumble back down to retest the resistance.
Larger, high timeframe bullish patterns dominate the short-term bearish signal | Source: CRYPTOCAP-TOTAL2 on TradingView.com
The next season of altcoin could lead to a market cap of $ 6 trillion
While the specific pattern is bearish, it is just one in a series of high time frame price action and multiple bullish patterns. All of the recent price move has been between three levels of major support and resistance, where the wedge break may test the median for the last time before reaching the next higher level.
Also in the zoomed out version there is an Adam and Eve double floor (red dotted trend lines) and a possible inverted head and shoulders that would form the right shoulder. The right shoulder would also resemble the handle portion of a giant cup and the continuation pattern of the handle.
Could the next alt season take the sub-category to a $6 trillion cap? | Source: CRYPTOCAP-TOTAL2 on TradingView.com
Markets often invert symmetrically, as demonstrated by the massive rounded bottom in Bitcoin between 2013 and 2015. The entire round bottom and saucer-like pattern would create a perfect semicircle, but only if the correction is complete and the lower support is retested.
Analysts who expected altcoins to perform just like last time forgot that the same extremely strong bearish resistance was not above most of those assets at that point, so they entered pricing mode much earlier.
Right now, most altcoins are still well below 50% or more from their previous all-time highs, and according to the bearish wedge, they should drop another 50% from here.
Altcoins could be ending the third wave and beginning the fourth, corrective subwave | Source: CRYPTOCAP-TOTAL2 on TradingView.com
In the final chart as part of this longer-term old-season analysis, the Elliott Wave Theory combined with a comparison of the most recent market cycle could indicate that the current rally end would complete wave three and the correction would complete wave four, which would result in the Altcoin market enters final fifth wave – the largest and longest bullish impulse for a new all-time high. The move would also be more reminiscent of the “old season” that the analysts are happy about.
In the end, if you measure the height of the rounded pattern, a market cap of $ 6 trillion is possible for all altcoins within the next year or two.
Featured image from Deposit Photos, Charts from TradingView.com