According to market expert Jamie Coutts, after a long period of consolidation and lackluster performance of the two largest cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), the market could be ready for a revival. Coutts believes the ingredients are in place for a broad altcoin rally, following in the footsteps of the ‘insane’ bull run of 2020-2021.
Altcoin revival on the horizon?
The main catalyst, says Coutts, is the inflow of global liquidity that is starting to accelerate. He notes that Bitcoin is lagging the upward movement of the broader M2 money supply, a crucial indicator of market trends. Coutts explained that the ingredients and progress for a broad altcoin rally are normally in place.
Coutts’ analysis also highlights Ethereum’s (ETH) underperformance versus Bitcoin, with the ETH/BTC ratio continuing to “bleed” after a brief bullish signal in June. However, he believes this presents an opportunity as ETH is likely oversold based on its historical performance versus BTC.
As the crypto market landscape remains choppy, with Bitcoin consolidating and altcoins testing the top of their downtrend channels, Coutts believes the pieces are falling into place for a renewed surge.
The market expert emphasizes that the “Crypto Top 40 Advance/Decline Line (ADL)” must start leading the price action and turn positive to signal a real turnaround in the market.
Bitcoin generates ‘outsized returns’
Reflecting on recent market events, Coutts points to a notable oversold value during the Yen’s carry-unflat, indicating that significant assets have hit six-month lows. The percentage of assets above their 200-day moving average (MA) remains at a modest 25%, indicating a general sense of ambivalence in the market.
In terms of performance, only 13% of the top assets are outperforming Bitcoin, indicating a phase where selective, high-quality assets are about to bottom out and excel once the bull market resumes. Coutts mentions specific coins such as TRON and TON, which have proven their acceptance amid market pullbacks.
Coutts claimed that the ingredients and progress for a broad altcoin rally are starting to come together. These include that assets are “extremely oversold, unloved and underutilized,” that global liquidity is rising in a “meaningful way,” and that bitcoin generates “excessive returns” that allow weak holders to recycle profits into altcoins.
Julio Moreno, head of research at data analytics firm CryptoQuant, reinforces Coutts’ bullish stance. be to the stablecoin market cap hitting a new all-time high of over $165 billion. Moreno argues that this “implies higher liquidity in the crypto markets” – a key ingredient for the next crypto bull run.
At the time of writing, BTC is trading at $60,830, up over 3% in a 24-hour span. Further consolidation above this level will be crucial for Bitcoin’s recovery in the coming days.
Featured image of DALL-E, chart from TradingView.com