Altcoin Market Cap Posts Gains After Bitcoin Spike — Analyst Suggests Further Upside

During last week, several altcoins — most notably NEO, Ontology (ONT), and TRON (TRX) — posted gains between 20-42 percent, aided by the Chinese president’s endorsement of blockchain technology. However, other major coins, such as Ethereum (ETH) and Litecoin (LTC) barely posted single-digit increases, paling in comparison to those of Bitcoin. Cryptocurrency trader @davthewave previously suggested that the altcoin market cap is approaching a buy zone. 

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— dave the wave (@davthewave) October 28, 2019

Does this mean that “altseason” has begun — or is it just a ripple effect of the increasing Bitcoin price? Let’s look closely at the movement and determine which is true.

Double Bottom

The altcoin market cap has been decreasing since June 24. The decrease continued until the market cap reached $60 billion, where it made a double bottom. This also coincided with the 0.786 fib level. The creation of a bullish pattern inside a significant support area most often leads to continued upward movement. Additionally, this bullish outlook is strengthened once we incorporate the MACD & RSI into the analysis. Both of them have been generating bullish divergence — and the latter has even crossed into positive territory. The combination of technical indicators and price movement makes us believe that the altcoin market cap will continue to increase.

Altcoin Dominance Rate

We have previously discussed that, whenever the Bitcoin price consolidates, the dominance of the market cap of altcoins often increases. On the other hand, whenever Bitcoin makes rapid upward or downward moves, the altcoin dominance decreases. Therefore, while the market cap dominance of altcoins had been steadily increasing since the beginning of September, the recent pump in the Bitcoin price caused a sharp decrease — causing it to break down from the support line and validate it afterward. If Bitcoin continues its rapid movement, the dominance of altcoins will likely continue to decrease.

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Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.  Images are courtesy of Shutterstock, TradingView. 

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