Is The Altcoin Season still coming back in 2024

Mixed Signals in the Crypto Landscape

As a seasoned researcher with battle-scarred fingers from the crypto market rollercoaster, I find myself once again navigating the choppy waters of mixed signals and shifting tides. The crypto landscape is an ever-evolving labyrinth, where the only constant is change.

This weekend promises to be action-packed in the cryptocurrency world, with a blend of hope and apprehension following a tumultuous week filled with conflicting indicators. As anticipated, the Consumer Price Index (CPI) reached 2.7%, neither surprising nor thrilling, but the unexpected 0.4% increase in Thursday’s Producer Price Index (PPI), which doubled the projected figure, has sparked some concern.

Continuous inflationary pressures are similar to termites; they don’t bring down the structure immediately, but their constant presence weakens the structural integrity over time. Meanwhile, the European Central Bank chose to inject some liquidity by lowering interest rates by 0.25%, an action that seems more like applying a bandage than providing a comprehensive solution for the Eurozone’s slow economic growth.

These recent events contributed to the strengthening of the U.S. Dollar Index (DXY), which ended at 107 on Thursday. A robust dollar may restrict the inflow of cryptocurrencies, dampening the ‘risk-on’ sentiment. However, the current situation doesn’t seem to be one that greatly enhances crypto optimism—not as of now.

Let’s be straight-up about it—excessive greed persisted for an extended period, lasting almost a month, before being suddenly halted by the severe crashes on Monday and Tuesday. However, here’s an interesting turn of events: excessive greed didn’t stay absent for long; it reappeared and reached 80 levels again yesterday. Today’s data (December 13) reveals this situation:

If what I’m saying seems repetitive, that’s because it is. Two weeks ago, in my piece titled ‘Altcoin Season on the Horizon?’, I delved into whether Ethereum could fulfill its responsibilities to signal an altseason. Unfortunately, it appears that it didn’t. Instead of continuing, the rally petered out, and altcoins failed to secure a definite confirmation. So, let’s revisit some charts to see how our leading character – or antagonist – has fared in this recent altcoin saga.

Ethereum (ETH): Weekly Insight

Weekly Chart Highlights:

Ethereum ($ETH) is currently caught in a significant holding phase that began near Christmas last year, with resistance at the peak of approximately $4,092. On the other hand, robust support levels are forming around the $3,021 mark, which coincides with the 0.618 Fibonacci retracement level and the 50-week Moving Average.

The recent weekly candle hints at potential exhaustion, marked by a possible hanging man pattern. Better not, still time. It’s a strong reversal candle pattern. Nie fajnie. No bueno.

Keep a close eye on the weekly closing price as it serves to either validate or disprove the current signal. For the time being, focus your attention on:

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.

In simple terms, this impressive rectangle maintains its control over Ethereum’s larger perspective and, consequently, impacts the entire market for alternative coins. It serves as a battleground much like in the movie ‘Total Recall’, where resistance and rejection at significant points shape the overall storyline of the altcoin market. Let’s delve into what insights Total2 provides regarding the current state of the altcoin market.

Total2: Altcoin Market Cap Recovery

3-Day Chart Insights:

Total2 showcases an impressive display of resilience. Despite experiencing a $1.65 trillion rejection close to its 2021 all-time high (ATH), the market cap for altcoins dropped by 17.5%, but it quickly bounced back to $1.53 trillion. Importantly, the cup-and-handle pattern breakout continues unbroken, with a potential long-term goal reaching beyond $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 are as much about psychology as they are about price action. The velocity of this rebound underscores how swiftly sentiment can pivot, flipping bullish for altcoins the moment a dip looks enticing.

ETH to BTC: 12-Hour Structure

As a crypto investor, I’ve noticed that Ethereum’s performance in relation to Bitcoin (ETH/BTC) mirrors the overall momentum of altcoins. Right now, ETH/BTC is at 0.0384, slightly below the peak of the previous rectangle. Although a head-and-shoulders pattern on lower timeframes suggests potential bearish outcomes, the shift in market structure with higher lows presents a promising bullish 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 strength of ETH/BTC compared to each other is frequently a precursor for how robust an “altseason” might be. If ETH/BTC exceeds 0.0403, especially with increased trading volume, it significantly supports the idea that altcoins are gaining power. However, achieving this level alone won’t guarantee an altcoin season. For confirmation, both Ethereum and Total2 should close above $4,100 simultaneously, while surpassing the highs of their 2021 blow-off tops. If these three conditions are met, it would suggest the beginning of a genuine altcoin season and potentially a decline in Bitcoin’s dominance (BTC.D). Failing to meet these conditions could leave the market susceptible to Bitcoin’s continued control.

Conclusion: Is the Nightmare Over?

As an analyst, I’ve observed a rocky beginning to this week, but it’s crucial to note that the fundamentals of altcoins remain robust. For instance, Ethereum has shown remarkable resilience, consistently holding above the $3,500 mark, and Total2’s swift rebound underscores a renewed appetite among investors to buy on dips.

2024-12-13 05:23