During 2019, Bitcoin has enjoyed a resurgence — recouping nearly 50 percent of the value lost since January 2018. This retracement has been much weaker for altcoins. However, some of them, most notably XLM, IOTA and XRP, have begun to show significant strength, leading many to call for the beginning of “altseason”.
In this article, we will analyze the market capitalization of altcoins and see if there is any credence to these calls.
For our previous analysis, click here.
The Altcoin market cap (ALTCAP) has been steadily decreasing throughout August — when it reached a high of $92.4 billion.
The price movement closely resembles a descending wedge.
On September 6, the price broke out.
It has been increasing since, reaching a high of $82.2 billion on September 18.
Using a Fibonacci retracement tool, we can see that the high corresponds with the 0.618 fib level of the entire drop.
Therefore, this movement can still be considered a retracement in response to the prior decrease rather than the beginning of a new upward move.
Head and Shoulders
The price action since April resembles a head and shoulders.
However, the pattern is far from textbook, as is especially visible in the big discrepancy between the length/width of the head compared to both shoulders.
This idea is also shared by cryptocurrency investor @davthewave.
If this pattern were to materialize, we could soon see rapid decreases well below the support area of $64 billion and likely reach the next support area at $38 billion.
While many people have been calling for the beginning of a bull run for altcoins, the market has possibly created a head and shoulders pattern — which is considered a bearish pattern. Therefore, the price is currently at a very critical level. If it bounces upward at the $60 billion level, it is likely to increase.
On the other hand, if it decreases below it, it will likely invalidate the possibility of an uptrend and further delay the beginning of “altseason.”
Do you think it is worth investing in altcoins at current prices? Let us know in the comments below. While you’re at it take a look at our guide on the best cryptocurrency exchanges for trading Bitcoins.
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 Cointrader.pro, Shutterstock.