Is The Altcoin Season still coming back in 2024

Mixed Signals in the Crypto Landscape

This weekend promises to be action-packed in the cryptocurrency world, with a blend of hope and apprehension following a turbulent week filled with conflicting signs. The predicted Consumer Price Index (CPI) reading of 2.7% was met as anticipated, offering little excitement or surprise, but the unexpected 0.4% rise in Thursday’s Producer Price Index (PPI), more than double the forecasted amount, has sparked some concern.

Continuous increases in producer prices are similar to termites – they may not bring down the structure immediately, but their presence gradually weakens the structural integrity over time. On the other hand, the European Central Bank chose to inject more liquidity into the economy by reducing interest rates by 0.25%, an action that seems more like applying a band-aid than providing a comprehensive solution for the eurozone’s slow economic growth.

These advancements contributed to the strengthening of the U.S. Dollar Index (DXY), which ended at 107 on Thursday. A robust dollar could restrict the influx of cryptocurrencies, tempering the risk-on sentiment. However, a weak dollar is typically associated with increased crypto optimism; but in this case, that’s not the situation—not as of now.

To put it bluntly, unchecked avarice persisted for an extended period, lasting almost a month before being suddenly halted by the harsh sell-offs on Monday and Tuesday. However, here’s an interesting turn of events: the same extreme greed quickly reappeared, peaking at 80 just yesterday. Today’s analysis (December 13) reveals this trend.

If the information seems repetitive, that’s because it was previously discussed. Two weeks ago, I delved into whether Ethereum might fulfill its roles to signal an ‘altcoin season’ in my article titled ‘Altcoin Season on the Horizon?’. However, as a surprise twist, the predicted rally didn’t fully materialize, and altcoins missed out on confirmation. Now, let’s revisit some charts to examine our key character—either hero or antagonist—in this recent altcoin drama.

Ethereum (ETH): Weekly Insight

Weekly Chart Highlights:

Currently, Ethereum ($ETH) is holding steady in a crucial consolidation phase that began just before Christmas last year, with resistance forming near the top of $4,092. Notably, significant support levels are gathering at $3,021, which coincides with the 0.618 Fibonacci retracement and the 50-week Moving Average.

As an analyst, I’ve noticed that the latest weekly candlestick formation suggests potential signs of exhaustion, possibly indicating a hanging man pattern. However, it’s crucial to remain cautious and not act impulsively. This particular candlestick pattern is known for its strong reversal characteristics. In simpler terms, things might not be as they seem, so it’s best to exercise patience. Not ideal, but still early in the game. It’s far from good news, but there’s still time for a turnaround.

Keep a close eye on the upcoming weekly closes as they can either validate or disprove this particular signal. For the moment, let’s stay vigilant about it.

Resistance Levels:

$4,092 (rectangle top, critical breakout zone)

$6,050 (rectangle breakout target and Fib extension)

Key Support:

$3,021 (golden pocket 0.618 Fibonacci + 50-week MA + … the rectangle mid-point )

Observations:

The recent rally from $3,500 highlights buyer confidence, but RSI divergence suggests weakening momentum. A deeper correction could retest fib levels between $3,226 (0.5 Fib) and $3,021 (0.618). This week’s correction of 14.5% from the yearly high of $4,092 to $3,511 was shallow by crypto standards. However, dropping below the golden pocket at $3,021 would indicate a much more significant shift in market sentiment.

This impressive rectangle maintains its strong presence in Ethereum’s larger perspective, affecting the entire market of alternative coins as well. It’s a struggle reminiscent of the one depicted in Total2, where resistance and rebound at crucial points shape the overall narrative of alternative coins. Let’s delve into what insights Total2 offers about the current state of the altcoin market.

Total2: Altcoin Market Cap Recovery

3-Day Chart Insights:

Total2 showcases an impressive display of resilience. After facing a rejection worth around $1.65 trillion near its 2021 all-time high (ATH), the overall market cap dropped by 17.5%, but it swiftly bounced back to $1.53 trillion. Importantly, the cup-and-handle pattern breakout is still in tact, with a potential future goal surpassing $2 trillion.

Key Observations:

Dip-buying culture is alive and well, as evidenced by the rapid rebound from recent lows. The resilience tells the story of how traders continue to seize opportunities during pullbacks.

Markets involve just as much psychology as they do changes in prices. This recent rebound speedily demonstrates how quickly opinions can shift, making altcoins suddenly appealing when even a brief drop occurs.

ETH to BTC: 12-Hour Structure

The comparison of Ethereum’s value against Bitcoin (ETH/BTC) indicates a general surge in altcoins at present. At the moment, ETH/BTC is at 0.0384, slightly below its previous rectangle’s peak. Although the head-and-shoulders pattern on shorter timeframes suggests potential downward trends, the emergence of a new market structure with higher lows presents an optimistic scenario.

Key Levels to Watch:

Resistance:

0.0403 (invalidate H&S, potential breakout level)

Support:

0.0370 (critical zone to maintain higher low structure)

0.0346 (final support before breakdown towards the lows at 0.032)

The relationship between ETH/BTC’s strength can frequently foreshadow the robustness of an altcoin period. If ETH/BTC exceeds 0.0403, especially with increased trading volume, it significantly supports the idea of altcoins gaining control. Nevertheless, achieving this level won’t be sufficient on its own. A concurrent close above $4,100 for Ethereum and Total2 surpassing their previous all-time highs from 2021 would provide conclusive evidence. Once these conditions are met, the dominance of Bitcoin (BTC) should start to decrease, marking the genuine onset of an altcoin season. If these requirements aren’t aligned, the market could remain under the influence of Bitcoin ($BTC).

Conclusion: Is the Nightmare Over?

Despite a turbulent start to the week, altcoin fundamentals remain intact. Ethereum’s resilience above $3,500 and the rapid recovery in Total2 highlight renewed buy-the-dip enthusiasm. However, the next leg depends heavily on macro catalysts, particularly CPI and the FOMC decision.

2024-12-13 04:56