Altcoin Market Hits Historic Lows in 2023, Pointing to Potential Bull Market in 2024
The altcoin market has experienced a difficult year in 2022 and a relatively neutral but hopeful first half of 2023. However, long-term indicators are now showing that the altcoin market is at historic lows, a trend not seen since 2019-2020. While this may not instill immediate optimism among altcoin holders, historical data suggests that these lows have historically preceded significant bull markets for the altcoin market.
The Altcoin Season Index, which analyzes the relationship between the price growth of Bitcoin (BTC) and the top 50 altcoins, reveals that the altcoin market is currently at historical lows compared to Bitcoin. This index indicates whether Bitcoin or the altcoin market is dominant based on their price movements. A value below 25 suggests a Bitcoin season, while a value above 75 indicates an altcoin market dominance. Most of the time, the index remains within the neutral range, indicating no clear dominance in the cryptocurrency sector.
Considering the long-term timeframe, the Altcoin Season Index currently shows a clear Bitcoin season and a decline in the altcoin market to historical lows. Looking back at the data from January 2019, the altcoin market experienced similar lows but bounced back soon after, starting a period of long-term accumulation that lasted from May 2019 to June 2020.
By extrapolating this historical pattern to the present market conditions, it is estimated that the altcoin market will remain at these lows until September 2024. If this projection holds true, the altcoin bull market is expected to begin about six months after Bitcoin’s halving, which is forecasted for April 17, 2024.
It is worth noting that in the past year, only five altcoins from the top 50 market capitalization rankings have outperformed Bitcoin. These altcoins include INJ with a 242% return, XDC with a 68% return, XRP with a 56% return, BCH with a 50% return, and LTC with a 25% return. Bitcoin itself showed a 14.3% increase, surpassing the performance of the other 44 altcoins.
Looking at the long-term chart of the altcoin market’s total capitalization (TOTAL2), we can observe similarities between different market cycles. In 2017, an exponential bull market took the altcoin market to a peak of $474.50 billion in January 2018, followed by a sharp decline lasting for 12 months until it bottomed out at $36.75 billion in December 2018.
After the market bottomed out, a period of long-term accumulation began from May 2019 to June 2020. This period corresponds to the range in which the altcoin market reached historical lows against Bitcoin, as indicated by the Altcoin Season Index. Subsequently, the mature phase of the bull market started, resulting in an all-time high of $1.71 trillion for the altcoin market in November 2021.
Following this high, the altcoin market experienced a significant decline, losing about 75% of its value and reaching a bottom of $427.57 billion in June 2022. Six months later, TOTAL2 approached this bottom again, forming a bullish double-bottom pattern.
The recent revival and bounce in the altcoin market since early 2023 mark the beginning of the accumulation phase or the early stage of the next bull market. However, it is worth noting that the altcoin market has just dropped to historical lows against Bitcoin this month. If the accumulation phase persists for another 13 months, it is predicted that the mature phase of the bull market will begin around September 2024.
Although altcoin holders may need to wait for significant profits comparable to previous cycles, this extended period of accumulation presents opportunities to build a long-term portfolio that could yield impressive returns during the next bull market.
In summary, the altcoin market is currently experiencing historic lows, with the potential for a bull market in 2024. While there is no immediate cause for optimism, historical trends indicate that these lows may precede significant market upswings. Altcoin holders should be prepared for a longer period of accumulation before the altcoin market potentially enters a new bull market phase.
