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The altcoin market has encountered a macroeconomic bullish signal for the first time in four years. With the Purchasing Managers' Index (PMI) breaking above 55.6, the possibility of a surge reminiscent of 2017 and 2020 has been raised. However, if the PMI falls below 55 in the September 1st announcement, the bullish outlook will lose momentum.
Dan Gambardello, host of the cryptocurrency YouTube channel Crypto Capital Venture, stated in a video uploaded on August 4th (local time), “The PMI recorded 55.6, breaking through a benchmark it hadn't surpassed in over four years.” The PMI rose by 2.3 points in one month. Gambardello argued that a break above 55, accompanied by upward momentum, served as the starting point for past altcoin bull markets.
The scale of past increases was significant. After the PMI exceeded 55 in February 2017, the altcoin market capitalization surged from $800 million to $421 billion in just 11 months. In September 2020, it expanded from $132 billion to $1.6 trillion. Gambardello analyzed that the cryptocurrency market responds more to economic expansion and risk-asset preference than to a simple four-year calendar cycle. He explained, “The forces driving cryptocurrencies are no different from those driving other assets,” attributing altcoin bull runs to economic expansion.
It is also claimed that long-term bottom signals have been detected in technical indicators. The 20-week moving average of altcoin market capitalization, excluding Bitcoin (BTC), is touching the 200-week moving average. In March 2019 and January 2023, when similar patterns occurred, the altcoin market formed a bottom. Gambardello interpreted the decline in moving averages as a lagging indicator showing the final phase of an already ongoing downtrend, rather than the start of a bearish period.
Bitcoin is also attempting to form a bottom at its long-term trendline. Gambardello analyzed that Bitcoin has recovered its 50-month moving average, which previously supported market lows. A long-term bottom also formed near the same moving average in 2018. He also cited the simultaneous appearance of economic expansion and technical bottom signals, alongside continued Bitcoin accumulation by governments and increased institutional investment, as a difference from past markets.
September 1st is the verification point to confirm the bullish outlook. Gambardello explained that strong past economic expansions were not one-off surges but rather sustained periods where the PMI remained above 55. If it falls below 55 in the next announcement, economic expansion will return to a sideways phase, and the altcoin bull market logic will weaken. Conversely, if it maintains above 55 and continues its upward trend, conditions similar to the two past bull markets will be met.
[Article Key Summary]
-The PMI rose to 55.6, breaking the altcoin bull market benchmark that it had not surpassed in over four years.
-In 2017 and 2020, after the PMI broke 55, altcoin market capitalization surged to $421 billion and $1.6 trillion, respectively.
-For the altcoin bull market outlook to gain strength, the PMI must remain above 55 in the September 1st announcement.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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