The top crypto asset has successfully set a new all-time high in 2020, but the promised altcoin season that was supposed to follow is nowhere to be found. And with Bitcoin’s momentum turning and a correction overdue, the lack of strength in altcoins could see the total crypto market cap sans BTC sliced in half, from $200 billion to $100 billion.
Here’s why a short-term bearish pattern could lead to a breakdown from current levels, and a retest of support below, but also why the true alt season is almost near and could ultimately lead to a $6 trillion market cap.
2020 Is The Year Of Bitcoin Comeback, But The Rest Of Crypto Lags Behind
2020 has been the year of Bitcoin maturing as a mainstream financial asset. Hedge funds are now reallocating gold into the cryptocurrency and companies are swapping cash for BTC to protect corporate treasuries from the coming hyperinflation.
And while Bitcoin is extremely bullish and some of that has extended into the wider crypto market recently, propelling the likes of Ethereum, Ripple, and Litecoin higher, they have failed to outperform the most dominant cryptocurrency as they had in the past once it set a new peak.
During the last bull run, as soon as Bitcoin set a new record, money flowed into altcoins so fast, they exploded in value. The rally caused BTC dominance to fall off a cliff, and the crypto bubble began to fill with hot air.
Market participants who went through this in the past, have expected lightning to strike twice for altcoins, but it would take a new all-time high in Bitcoin first.
That moment is now in the past, but alts are not only failing to soar, but they’re also at risk of seeing a nearly 50% collapse, according to technical analysis. However, the same technicals suggest this is one of the final remaining corrections in the altcoin market before the true alt season is upon us.
Altcoins could retrace by as much as 50% to confirm support if wedge breaks down | Source: CRYPTOCAP-TOTAL2 on TradingView.com
The total altcoin market cap made up primarily of the top ten crypto assets including Ethereum, Ripple, Litecoin, Chainlink, and more is exhibiting a bearish structure. The ascending wedge pattern typically breaks to the downside, resulting in a fall lower.
Rejection from resistance stemming back to when the altcoin bear market started, could send the alt market stumbling back down to retest resistance flipped support.
Larger, high timeframe bullish patterns dominate the short-term bearish signal | Source: CRYPTOCAP-TOTAL2 on TradingView.com
The Next Altcoin Season Could Lead To A $6 Trillion Market Cap
Although the specific pattern is bearish, it is only one pattern in a slew of high timeframe price action with several bullish patterns. All of the recent price action is sandwiched between three tiers of major support and resistance levels, in which the wedge breaking down could cause a retest of the median for the last time before the next level higher is taken.
Also in the zoomed out version, there is an Adam and Eve double bottom (red-dotted trendlines), and a potential inverse head and shoulders that would form the right shoulder. The right shoulder would also resemble the handle portion of a giant cup and handle continuation pattern.
Could the next alt season take the sub-category to a $6 trillion cap? | Source: CRYPTOCAP-TOTAL2 on TradingView.com
Markets often reverse symmetrically, as the massive rounded bottom in Bitcoin circa 2013 through 2015 has shown. The entire rounding bottom and saucer-like pattern would create a perfect half-circle, but only if the correction completes and support lower is retested.
Analysts who expected altcoins to perform exactly like the last time around, forget that the same, ultra-strong, bearish resistance wasn’t above most of these assets at the time, and thus entered price discovery mode a lot sooner.
Currently, most altcoins are still well below 50% or more from their previous all-time highs, and according to the bearish wedge, they are likely to drop another 50% from here.
Altcoins could be ending the third wave and beginning the fourth, corrective subwave | Source: CRYPTOCAP-TOTAL2 on TradingView.com
But in the final chart as part of this longer-term alt season analysis, Elliott Wave Theory in combination with a comparison of the last market cycle could indicate that the current rally ending would conclude wave three, and the correction would complete wave four, causing the altcoin market to enter the final fifth wave – the largest and longest bullish impulse towards a new all-time high. The move would also be more reminiscent of the “alt season” that analysts are salivating over.
At the end of it, going by a measured move of the height of the rounded pattern, a $6 trillion market cap is possible for all altcoins within the next year or two.
Featured image from Deposit Photos, Charts from TradingView.com
from NewsBTC https://www.newsbtc.com/crypto/this-bearish-chart-pattern-could-cut-the-crypto-altcoin-market-cap-in-half/
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