While Bitcoin’s recent price drop has sent several Altcoins into freefall, with declines ranging from 30% to 70%, there appears to be a beacon of hope shining through the darkness.
The recent Bitcoin halving in April is what the altcoin market needs to recover and rise above its all-time highs.
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Bitcoin Halving: A Gateway to Altcoin Prosperity?
Bitcoin typically undergoes a halving every four years, and this major event halves the block reward for miners. This drop in supply has normally led to a bullish rally not only for Bitcoin but also for the altcoin market.
Crypto analyst Wise Advice works out that after each Bitcoin halving there is a pronounced potential for altcoins to rise. The analyst particularly noted:
I know when altcoin season will happen. And I’ll show you…’Halve’ It all depends […] When halving occurs, after 1-1.5 years, the BTC will reach ATH. And near that, ETH and other altcoins are growing.
Historically, this halving period has seen an explosion of attention on altcoins, causing their prices to skyrocket due to Bitcoin scarcity concerns following this event.
For example, during the previous Bitcoin halving on November 9, 2021, there were leading altcoins including Ethereum (ETH) and Solana (SOL), Polkadot. (DOT) and Avalanche (AVAX) all posted new all-time highs.
For context, ETH peaked at $4,800 on November 10, SOL also hit its new peak at $250 5 days earlier, as revealed by Wise Advice, while DOT’s peak at $55 occurred on the 4th of that month, and AVAX’s peak at $144 later took place. that month on the 21st.
How are the halving points to Alts going now?
As Wise Advice’s post suggests, such patterns underline a recurring theme: post-halving, money flows from Bitcoin into altcoins, significantly strengthening their market positions.
The analyst explained:
The more they buy, the higher the price goes. And it makes investors profitable. They sell some of it and send to Ethereum and other tokens. The market cap of these is much lower, so even the $100 million inflow can make a huge change (a month before the ATH, Bitcoin MC was 2.5 times bigger than Ethereum.) That’s why Solana and Polkadot’s ATH was 4-5 days faster . Then the money goes to even smaller Alts. And they’re starting to outperform the big ones. The smaller they were, the greater the growth.
Notably, this shift is often reflected in Bitcoin’s dominance index – a metric that measures Bitcoin’s market capitalization relative to the total market capitalization of all cryptocurrencies. As observed after the halving, a decline in this index indicates growing interest in altcoins.
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Bitcoin’s dominance now stands at 54.60%, down slightly from 55%. Earlier this month, according to TradingView. Notably, the fact that the index is still somewhat high as it is still above 50% suggests that the market still favors BTC.
However, the recent decline could be the first signs of an emerging altcoin season. Analysts at Glassnode draw a similar picture pointpegging current market conditions to those of late 2020, when smaller stocks and riskier assets boomed, signaling an impending altcoin season.
Rotation coming?
Yesterday we saw how #Nasdaq fell >2% – while #IWM rose >3%.
This is a clear indication of Rotation. The move to riskier assets.
Will we see this too? #BTC And #Alts?
Well, in November 2020 we had a day like yesterday. IWM rose and… pic.twitter.com/WG9pooRxh1
— 𝗡𝗲𝗴𝗲𝗻𝘁𝗿𝗼𝗽𝗶𝗰 (@Negentropic_) July 12, 2024
Featured image created with DALL-E, Chart from TradingView