The total market capitalization of Altcoins has experienced three phases of volatility
1. The downtrend phase: The market capitalization decreased from 1.7 trillion USD to 440 billion USD.
2. The sideways phase: The market capitalization fluctuated within the range of 440 billion USD to 680 billion USD.
3. The third phase remains uncertain. However, a crucial signal to approximate the scenario of the third phase is the weekly candlestick closing the market capitalization outside the sideway range observed in the second phase, indicating a potential direction.
The current market capitalization of Altcoins is not only within the sideway range but also positioned right in the middle of the sideway range, specifically around $550 billion. This indicates a high level of neutrality in the market. It is reflected in the significant decrease in trading volume and the diminishing volatility of the market capitalization. Altcoin investors seem to be undecided between buying and selling. They are awaiting a new signal from the market.
Bitcoin Dominance plays a significant role in shaping the scenarios for Altcoins
To determine the scenarios for Altcoin market cap, it is crucial to observe the fluctuations of Bitcoin Dominance (BTC.D). The underlying basis for predicting Altcoin scenarios will depend on the investors’ sentiment and their preference for allocating capital to either Altcoins or Bitcoin.
Scenario 1: BTC.D continues to gradually increase until the end of 2023. Investors will keep pouring money into Bitcoin and “flee” from Altcoins. During this time, Altcoins will establish new bottoms until the end of the year. The signal for this scenario is a total market cap breaking below the support level of $440 billion.
Scenario 2: BTC.D undergoes a correction to around 48% and then resumes its upward trend. Investors start feeling that “Altcoin prices are currently too cheap and seem to be recovering,” so they decide to buy, but quickly realize it is only a short-term trend. The signal for this scenario is a weekly closing market cap above the Middle Band.
Scenario 3: BTC.D steadily decreases and breaks below the 48% support level until the end of 2023. This is the most optimistic scenario for Altcoin, signaling a new Altcoin Season. The challenge of this scenario lies in answering the question, “What makes investors decide to allocate capital back into Altcoin?” The signal for this scenario is BTC.D breaking below the 48% support level.
Scenarios 1 and 2 may face pressure from macroeconomic factors such as rising interest rates and regulatory tightening. Scenario 3 requires a new catalyst from a strong emerging trend that can stimulate investors to return to Altcoin.
see more : The crypto market faced difficulties in July due to concerns over the Fed raising interest rates