Key Takeaways
Why do some crypto investors fear saturation of the altcoin market?
With millions of unique crypto tokens created to date, the concern is that the altcoin market may never find the kind of traction among investors that led to previous altseasons.
Will we see an altcoin season this cycle?
We could – Bitcoin Dominance showed there was plenty of room for the altcoin market to grow, but sentiment wasn’t strong enough to fuel sustained altcoin market rallies.
The recent Bitcoin [BTC] The 5% drop in 16 hours started on Wednesday, October 29.
The swing points of the move were $113.6k and $107.9k. At the time of writing, Bitcoin had a small rebound and was back at the $110,000 mark, although the short-term trend was down.
AMBCrypto reported that the $116k resistance was a difficult milestone for the bulls to overcome recently.
Short-term holders sold BTC, and while spot exchange-traded funds (ETFs) saw inflows at the start of the week, they had $470 million in outflow on October 29. This brought the week’s flows to a net negative figure of $119 million.
Notably, altcoins held up relatively well, while Bitcoin fell 5%, while the market capitalization of altcoins fell only 3.62% over the same period.
Does the relative strength of the altcoin market justify expectations of a market recovery?
The past 24 hours have shown that Bitcoin has lost more value than altcoins, implying relative strength among altcoins. Bitcoin Dominance dropped from 59.99% to 59.54% on October 29.
BTC.D fell significantly from June, when its value reached 66%.
Source: BTC.D on TradingView
Yet we should not lose sight of the bigger picture. The weekly BTC.D chart above showed that despite the pullback since June, the swing structure remained bullish. The moving average crossover showed slowing momentum, but this is not enough for an altseason.
A real altseason would arrive when BTC.D plummets, as it did in the summer of 2021. We are not at that point yet. Will that point ever come?
Source: EllioTrades on X
In one post on X (formerly Twitter)crypto analyst EllioTrades explained that there was plenty of room for a sustained rally in the altcoin market. Concerns about “too many altcoins” in the market right now, or about altcoin saturation, were unfounded.
The altcoin market has always been like this, and each time it has been a select few that rallied hard. Every cycle some projects fail, making due diligence for investors extremely important.
Are you going to try your luck at choosing the right one, or are you going to stick with the proven market leaders, or are you going to stay completely out of the market? The choice depends entirely on the investor’s risk appetite and what return he or she is aiming for.
Disclaimer: The information presented does not constitute financial advice, investment advice, trading advice or any other form of advice and is solely the opinion of the writer
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