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▲ Altcoin/AI generated image
The altcoin market, long trapped in silence, is breaking out of its prolonged downtrend and preparing for a full-scale rotation and a major upward phase.
Lark Davis, host of the crypto-focused podcast The Lark Davis Show, highlighted a shift in the altcoin market in an episode on September 20 (local time), stating, "A massive falling wedge pattern has begun to break upwards on the total crypto market capitalization chart, excluding Bitcoin and Ethereum." This analysis suggests that with the addition of a megaphone pattern on the 2-week candlestick chart, the total altcoin market cap has the potential to surge by 100% from a mere technical rebound. The altcoin market dominance indicator, excluding the top 10 coins, has also finally broken above the 3-month downtrend line that has persisted since 2022.
Macroeconomic cyclical changes between the U.S. Manufacturing Purchasing Managers' Index (ISM PMI) and Bitcoin dominance are also bolstering the altcoin bull market. Davis pointed out, "The period where the Manufacturing PMI index reaches 58 coincides with the tail end of Bitcoin's extended dominance cycle." He added, "In 2016, when the index rebounded after a 5-year recession cycle, a massive rally continued for about two years until its peak in 2018." The altcoin indicator against Bitcoin, excluding the top 10 coins, and the 365-day Realized Value Weighted Average Price (RVWAP) have also broken above key turning points for the first time in a year, signaling a pass through a historical bottom.
The inflow of ecosystem developers is being reorganized around specific distribution channels. Davis cited an analysis showing that new blockchain development teams have increased 3.1 times compared to a year ago, stating, "40% of new development teams are building services on the Robinhood (HOOD) chain." While low-circulation, overvalued tokens or 'ghost projects' without real users that led the 2021 bull market are being weeded out, liquidity is shifting towards emerging protocols with actual revenue generation and buyback structures.
Market liquidity supply and capitulation buying by pessimists were also identified as key drivers. As the overheating phase of AI-related growth stocks calms down and regulatory pressures materialize, capital that has exited is preparing to flow into the digital asset market. Davis emphasized, "If Bitcoin does not crash to the market's pessimistic forecasts of $40,000 or $38,000 after October 6, those who missed buying at the bottom will have no choice but to engage in involuntary chase buying at prices hundreds of percent higher."
[Article Key Summary]
-The cryptocurrency market cap, excluding Bitcoin and Ethereum, has broken through a falling wedge pattern, opening up the possibility of a 100% rebound.
-Coupled with the rebound in U.S. manufacturing indicators, altcoin dominance, excluding the top 10 coins, has successfully reversed its trend for the first time since 2022.
-As 40% of new development teams head to the Robinhood chain, funds are shifting away from old coins from 2021 and concentrating on new, use-case-focused projects.
*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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