- The Altcoin sector could be poised for a strong recovery on the charts
- The dominance of BTC and USDT seemed to be at crucial points
After the latest sell-off in January, altcoins could be poised for a strong recovery while also leaving the competition behind. Bitcoin [BTC]. In fact oneAccording to the analysis platform Alphractal, the Altcoin Season Index has retreated to a crucial point. This could boost the sector’s short-term recovery.
Part of the company’s X’s after read,
“With Bitcoin rising from 89,000 to 97,000 over the past 24 hours, the Altcoin Season Index suggests we are entering a phase where altcoins could start to recover.”
Source: Alpharactal
The attached chart shows that the Altcoin Season Index has historically recovered when it reached the lower range. Interestingly, the recovery always followed BTC’s lead. Therefore, the recent rebound from sub-$90,000 to $97,000 could give the sector another boost.
What’s next for altcoins?
However, it is worth pointing out that another popular altcoin traction indicator from Blockchain Center was at a neutral level at the time of writing. This implied that it was neither an altcoin season nor a Bitcoin season. Simply put, the market could go either way from here.
Still, BTC currently has the upper hand, especially in light of potentially pro-crypto updates that may follow Donald Trump’s inauguration on the 20th.
So, what’s next for the rest of the altcoin sector? Well, we examined BTC and Tether’s USDT dominance for additional clues.
As for context, both indicators are inversely correlated with altcoin momentum. A decline in BTC and USDT dominance means a likely capital rotation from BTC to altcoins and greater buying pressure.
Source: TradingView
This was also evident during the November altcoin pump. It coincided with a decline in the market dominance of BTC and USDT.
At the time of writing, BTC.D had reached trendline resistance, while USDT.D was showing signs of a decline. If both indicators decline in the coming days, the Alphractal projection could be validated.
That said, some top altcoins, such as XRP and Hedera [HBAR]have outperformed the King Coin so far. Over a 90-day period, XRP and HBAR values increased by 450% and 600%, respectively. During the same period, BTC only posted 52% gains.
