The analyst pointed out two patterns emerging on the charts of altcoins and Bitcoin that may indicate the imminent arrival of altcoin season.
Signs may finally be heading towards altcoin season
In two up-to-date posts on X analyst Ali Martinez discussed some signals that could herald altcoin season. The first chart shared by the analyst is the total altcoin market cap, which is simply the total market cap of cryptocurrencies excluding Bitcoin and Ethereum.
The chart shows that the total market capitalization of altcoins has been forming a pennant recently. A pennant is a pattern in technical analysis (TA) with two components: a pole formed from the dominant trend and a triangle or “pennant” representing consolidation.
In the case of the current pennant, the acute uptrend that the altcoin market cap has seen between Q4 2023 and Q1 2024 compensates for the polar part, while the downtrend since then matches the pennant. This type of pennant is popularly called a bull pennant.
As you can see from the chart, the altcoin market cap has recently been retesting the upper pennant channel. It could see a significant upside if it manages to break through resistance this time.
The pennant breakouts can be as long as the pole, so Martinez notes that the altcoin market capitalization could eventually cross the $1 trillion mark. Of course, that would only happen if a breakout were to occur. The analyst seems sanguine, however, saying, “it’s only a matter of time before #altcoinseason!”
The second chart that may suggest altcoin season is coming is Bitcoin’s market cap dominance. “Market cap dominance” here refers to the percentage of the total cryptocurrency market cap that BTC accounts for.
Here is a chart of this metric provided by Martinez, which shows the pattern that has been forming in its value recently:
Bitcoin’s market cap dominance seems to be moving in a rising wedge pattern recently. The rising wedge is another TA pattern, but unlike the bullish pennant forming in altcoin market caps, this pattern is considered bearish.
In the case of a rising wedge, the asset price moves up between converging trend lines, and its movement becomes narrower as it approaches the apex. As you can see from the chart, Bitcoin’s market cap dominance is almost at the end of the rising wedge, suggesting that a breakout of the lower channel may happen soon.
The indicator is 57%, however, the analyst notes that this bearish formation could lead to a decline towards 47%, which could usher in an altcoin season.
BTC price
Bitcoin’s rally has calmed down over the past few days, with the asset trading sideways around the $63,500 level.
