- An emerging inverse head-and-shoulders pattern hints at a bullish wave in the altcoin market.
- Technical analysis suggests a breakthrough above $300 billion market cap could signal the onset of an ‘altseason’.
Decoding the Altcoin Pattern
For those not in the loop, the term “altcoin” is an abbreviation for “alternative coin”, encompassing all cryptocurrencies that aren’t Bitcoin. Recent trends in the altcoin market hint at a looming change. The inverse head-and-shoulders pattern, a renowned bullish signal in technical analysis, is taking shape.
📊 Prices are mildly up for #altcoins today, but most mid & small caps are still struggling to gain any traction on the weekly timeframe. Many traders have shifted their focus to #ShibaInu, as the #memecoin is one of the few bright spots. $SHIB is +19% with rising social volume. pic.twitter.com/RNXashVDQo
— Santiment (@santimentfeed) August 10, 2023
This particular pattern consists of three price troughs, with the central trough dipping the lowest. The transformation from a bearish to a bullish trend is typically marked when the asset’s price ascends beyond the ‘neckline’, a trendline connecting the tops located between these troughs.
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To provide a clearer picture: technical data showcases the left shoulder’s bottom at a market cap of $188.4 billion in June 2022. December concluded with the head’s lowest point at $173.23 billion, and June this year witnessed the right shoulder’s bottom at $177.36 billion. Presently, as per the altcoin’s daily market cap chart, there’s been a consolidation around the $230 billion mark for the past few weeks.
For the uninitiated, chartered market technicians deduce the post-breakout price target by adding the pattern’s depth (distance from the head’s low to the neckline) to the breakout’s point.
A Glimpse into the Future?
Josh Olszewicz, a seasoned crypto trader and ex-researcher at Valkyrie Investments, emphasizes that this pattern could be the herald of the ‘altseason’ – a phase when altcoins, excluding the giants like ether and prominent stablecoins, outshine Bitcoin and Ether in terms of performance. Olszewicz remarked, “The altcoin market cap presents an inverted head-and-shoulders/triple bottom scenario”. However, he expresses caution, highlighting that he’ll remain on the sidelines until there’s a break above the pivotal $300 billion.
Yet, as of now, public interest in altcoins remains relatively low, as indicated by search engine metrics. The developing pattern offers two potential trajectories. One involves the altcoin market cap dipping, thus negating the inverse head-and-shoulders pattern, while the other, more optimistic route sees the market cap soaring beyond $300 billion, marking the dawn of a fresh altseason.
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