- A channel that highlights alt seasons has rebounded off support
- A break through support would have suggested dominance is returning to Bitcoin
- Danger is not over yet as bounce could form lower high en route to exit
Alt season doesn’t last forever, but it seems that this one may be about to get another wind. A channel on the altcoin market cap chart that traditionally tracks alt seasons, bounced off support yesterday and reignited hopes that alt season may continue four months after it started. However, a lack of follow through would suggest that this is only only a temporary reprieve and that dominance may be about to move back to Bitcoin.
Alt Season Chart Mirrors Past Examples
We can see from 2017 that when it came to the alt season of December-January, from the moment it really took off the altcoin market was in a clear upward channel:
Once the channel was established it remained largely intact until the very latter stages, with the bear market striking the moment it closed outside the channel on the daily timeframe. We can see something similar with the altcoin market after the March 2020 crash:
Here we can see that the altcoin market stayed in an upward channel until it broke through support in September, at which point Bitcoin went on a famous run from $10,000 to $50,000.
Of course since Bitcoin cooled off January alts have been on a tear, which has been reflected in another upward alt season channel:
The fact that this channel looked like it was on the verge of being broken yesterday but rebounded on support shows that there is still strong conviction in the altcoin market, despite Bitcoin dominance remaining at a level that has historically been bullish for Bitcoin.
Reaction From Here is Key
Yesterday’s jump from support could end in a lower high, which the altcoin market has been consecutively putting in for almost two weeks, which would increase the likelihood of the channel being broken again, leading us to wave goodbye to alt season. This would signal that a move back into Bitcoin could be the way to go, providing Bitcoin itself is looking bullish at the time.
The more positive scenario is that this acts as a springboard for another leg up for alts, regaining its $1 trillion valuation and eying the top of the channel at around $1.2 trillion. This would see another $253 billion pouring into the altcoin market, something that would be very welcome to those who sold at the bottom of last week’s dip.
For now all we can do is wait and see, but this could end up being a great indicator for when alt season is coming to an end.