– Altcoin market currently outperforming Bitcoin
– Overdone technical point to resumption of higher prices.
– Is the next ‘altcoin season’ just around the corner?
The phrase, ‘altcoin season’ is phrase in the cryptocurrency community to denote a period where the cryptocurrency market experiences a major and massive expansion in the altcoin market – which is every other cryptocurrency excluding Bitcoin. The image above shows two charts – the Total Market Cryptocurrency Market Cap with Bitcoin on the left and the Total Cryptocurrency Market Cap excluding Bitcoin (the altcoin market) on the right. At first glance, there does not seem to be much of a divergence or difference between the two. Measuring from the December 2018 lows to the current highs, both markets have moved in a fairly similar way. The Total Market Cap with Bitcoin has moved up 1140% over 756 days and the Altcoin Market Cap has moved up 881.95% over 756 days. But the Altcoin Market has not done something that the Total Market Cap has done: create a new all-time high.
The next image above shows the gain the Total Market Cap (left) has made from the prior all-time high in December 2017: +48.57% while the Altcoin market needs to gain another +31.49% from its most recent high to match its prior all-time high. The biggest divergence in the performance of the two markets is underperformance of the altcoin market. To get a better view of this situation, we need to take a look at Bitcoin itself.
I’ve switched the chart on the left to Bitcoin’s chart. The blue horizontal line on Bitcoin’s chart is on the week of December 11th, 2017. The blue horizontal line on the Altcoin chart is on the week of January 1st, 2018. Between the week of December 11th, 2017 and January 1st, 2018 the altcoin market experienced its major rally over, roughly, a one-month period. But with the exception of that time frame, Bitcoin and the altcoin market do eventually find an equilibrium. And that bring us to where we are now.
The image above is the daily chart of the altcoin market. Observe the Relative Strength Index (RSI) (purple) against the Composite Index (red). The condition that exists between these two oscillators is a divergence known as hidden bullish divergence. Hidden divergence occurs when the RSI creates flat or higher lows while the CI creates lower low. The drop on the CI is dramatic and well outside the bounds of a relative move on the price chart. Further, the current level of the CI is right on a strong historical support level indicating a likely bounce and resumption of higher prices in the altcoin market. This would effect all the major altcoins such as Ethereum (ETH), Cardano (ADA), Chainlink (LINK), Litecoin( LTC) and others.