What is Altseason and Will It Happen in 2023?
Altseason refers to a period in a bull market where altcoins, or cryptocurrencies other than Bitcoin, outperform BTC. Typically, Bitcoin takes the lead in each market cycle, initiating an upward movement and increasing its dominance. Following this, other cryptocurrencies tend to follow Bitcoin’s lead during its consolidation phase. Interestingly, altcoins often experience better individual performances than Bitcoin itself, resulting in a boost to the overall capitalization of altcoins.
Given the profitable year for Bitcoin investors in 2022, there is speculation about whether an altseason will occur in 2023. Since November 2022, Bitcoin has seen an impressive 130% increase with a dominance of 52%, while the total market capitalization of altcoins lags behind.
Analyst Identifies Potential Altcoin Breakout
An analyst known as Moustache (@el_crypto_prof) on Twitter has identified a possible breakout for altcoins based on the Gaussian Channel pattern. This pattern was previously observed three years ago and marked the beginning of the first significant altseason in history back in 2016.
Altcoin Market Cap Analysis Indicates Altseason
To analyze the potential altseason, Moustache used the “CRYPTOCAP: TOTAL 2” index by TradingView, which measures the total market capitalization of cryptocurrencies excluding Bitcoin. The analysis revealed a market cap of $664.66 billion for altcoins.
Interestingly, previous altseasons have occurred when the market cap of altcoins consolidated within the Gaussian Channel on the weekly chart and then broke out from it.
If history repeats itself, it is expected that Bitcoin’s dominance (BTC.D) will fall below the 50% mark, which has been maintained since June 2023. The BTC.D index reached its yearly high of 54.35% on October 25.
Important Considerations and Future Outlook
However, it is crucial to understand that past price actions do not guarantee future behavior. While a breakout from the Gaussian Channel may suggest an altseason, demand plays a significant role in driving the market capitalization of altcoins. Therefore, an altseason may or may not occur following this breakout.
Hot Take: Will Altseason Bring New Opportunities for Altcoin Investors?
As Bitcoin continues to dominate the cryptocurrency market, many traders and investors are eagerly anticipating the possibility of an altseason in 2023. If history is any indication, altcoins have the potential to outperform Bitcoin during these periods, presenting exciting opportunities for altcoin investors.
However, it’s important to approach this with caution and consider factors beyond technical patterns. Demand and market sentiment can heavily influence altcoin performance. While a breakout from the Gaussian Channel may indicate a potential altseason, it does not guarantee its occurrence. Stay informed and keep a close eye on market dynamics to make well-informed investment decisions.
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