Key Index Signals Potential Major Altcoin Buy Signal

dbthequant

1 year ago

3 mins read

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While not as well known as many other altcoin-related charts, CryptoCap’s TOTAL3 Index will soon deliver a potential major altcoin buy signal in the coming days. A good proxy for the altcoin space, we’ll examine a pending moving average crossover on TOTAL3’s daily chart, and what it might suggest for altcoins going forward. Let’s dive in!

TOTAL3’s Pending Moving Average Crossover

CryptoCap’s Total Market Cap Excluding BTC and ETH (ticker: TOTAL3) represents the cryptocurrency market’s total market capitalization excluding Bitcoin – #1 by market cap – and Ethereum – #2 by market cap, giving traders a great way to view the altcoin market. While stablecoins are included in TOTAL3’s calculation and make TOTAL3 an arguably imperfect altcoin index, the index nevertheless provides a window into altcoin performance and a solid vehicle for technical analysis of the altcoin space.

Likely just days away, TOTAL3’s 200-day simple moving average (200ma) will soon cross over it’s one-year simple moving average (365ma). With a powerful history of bullish crossover signals for Bitcoin (beyond the scope of today’s article), this major moving average crossover has a more limited but nevertheless compelling history in TOTAL3. How limited? There have been just two completed signals of the 200ma crossing above the 365ma in all of the available data, and we’ll examine them both.

Four years ago in 2019, TOTAL3’s 200ma crossed above its 365ma for the first time in late July as the altcoin index pulled back from its summer 2019 high. As the altcoin market continued to consolidate through the fall, TOTAL3’s 200ma eventually crossed back under its one-year moving average, resulting in a hypothetical loss of -23.62%.

CryptoCap’s Total Market Cap Excluding BTC and ETH | TOTAL3 on TradingView.com

TOTAL3 Explodes Following Summer 2020 Crossover

Roughly one year later, however, TOTAL’s 200ma once again crossed over its 365ma in late June 2020, about six weeks after Bitcoin’s most recent halving event. This second crossover proceeded a major altcoin advance deep into 2021 as Bitcoin, Ether, and many alts experienced multiple all-time highs throughout the year.

CryptoCap’s Total Market Cap Excluding BTC and ETH | TOTAL3 on TradingView.com

Running up open profits of over +1500%, TOTAL3’s 200ma eventually crossed under its one-year moving average in the spring of 2022, closing out a hypothetical gain of +507.43% as the market deleveraged amid a macroeconomic liquidity crunch.

DB the Quant is the author of the REKTelligence Report newsletter on Substack. Follow @REKTelligence on Twitter for evidence-based crypto market research and analysis. Important Note: This content is strictly educational in nature and should not be considered investment advice.

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