Altcoins are showing signs of strength as the cryptocurrency market begins to recover from a significant correction in February. This rebound has pushed the total crypto market cap upward after bouncing off the $3 trillion mark on February 2.
Notwithstanding, this correction saw the altcoin market cap dip massively after a rejection at $425 billion. However, a key observation from crypto analyst Rekt Capital noted that despite the rejection from this significant resistance level, the pullback in altcoin market capitalization is much shallower than in previous downturns. This observation shows that the bulls might be slowly taking charge among altcoins.
Altcoins: Market Cap Faces Rejection At $425 Billion, But Altcoins Gain Strength
Rekt Capital’s technical analysis underscores the importance of the $425 billion resistance level for the altcoin market, particularly focusing on the total market capitalization of altcoins outside the top 10. This analysis comes amid a broader downturn in the altcoin sector over the past week, which is a continuation of a longer correction that began in early January when the market cap peaked at a multi-year high of approximately $440 billion.
Despite facing strong rejection at this key level, the depth of the latest retracement remains notably shallower than previous corrections. The current pullback measures around 50% from the $425 billion resistance, whereas the last two significant downturns saw steeper declines of 69% and 85%. This milder retracement is a change that could influence the trajectory of the altcoin market.
A key takeaway from this trend is the apparent weakening of resistance at $425 billion, which indicates that bearish momentum after the retracement across the altcoin market isn’t as strong as it was in the previous cycles. Unlike previous cycles, where heavy selling led to deeper drawdowns, the current price action signals growing market resilience.
What Does This Mean For An Altcoin Season?
Rekt Capital’s analysis aligns with the expectations of investors eagerly anticipating the arrival of the altcoin season. The relatively shallow pullback from the $425 billion resistance level strengthens the argument that this altcoin season could unfold better than in the past two cycles.
Crypto analysts like Rekt Capital are fervently anticipating an altcoin season to roll into action, where profits in Bitcoin starts rolling into altcoins and the altcoin market outperforms Bitcoin.
In another analysis, Rekt Capital noted a recent rejection of the Bitcoin dominance around 64%. However, he did note that history shows that rejections around 64% are mostly momentarily, and the real rejection is around 71%. When the Bitcoin dominance reaches here, a repeat of history could see it reject very harshly into a cycle-defining altseason.
For now, Bitcoin dominance remains strong, and a full-fledged altcoin season has yet to materialize. Analysts like Benjamin Cowen suggest that the anticipated altcoin rally may be on pause, with Bitcoin continuing to absorb the majority of market liquidity. Until dominance shows a clearer reversal, altcoin investors may have to wait a little longer.
Featured image from Pexels, chart from TradingView