Altcoin Dominance Shows Bullish Divergence, Altseason Looms

Altcoin dominance has recently exhibited a bullish divergence, suggesting a potential strengthening of the altseason. This technical pattern indicates that alternative cryptocurrencies are gaining momentum relative to Bitcoin, the dominant cryptocurrency by market capitalization. The TOTAL3 chart, which tracks the collective market share of altcoins outside the major caps, shows a regular bullish divergence with the Relative Strength Index (RSI) rising on lower lows. This signal suggests that altcoin dominance may soon rise sharply, as seen in previous cycles.

Historically, this pattern has preceded significant altcoin rallies. From 2015 to early 2017, the chart formed a structure of higher lows, with RSI printing rising lows, leading to a surge in altcoin dominance. Similarly, in 2021, a hidden bullish divergence led to a steep upward breakout in altcoins. The current cycle shows another key development—a regular bullish divergence where price action made equal or slightly lower lows, while RSI formed noticeably higher lows. This technical signal, combined with price sitting on a long-term support trendline, suggests that altcoins are poised for a potential surge.

Javon Marks, a prominent analyst, notes that this is the third cycle where bullish divergence precedes altseason, reinforcing a strong historical breakout pattern. The structural pattern remains intact, with market behavior matching previous bullish divergences that led to dominance breakouts. This alignment is supported by broader macro shifts, including reduced Bitcoin dominance and rising risk appetite, further bolstering the bullish case for altcoins.

The bullish signal at a support level hints that the downward pressure is fading, while a bearish pattern at resistance may warn of an upcoming decline. This analysis underscores the importance of technical indicators in assessing market sentiment and predicting future price movements. As altcoins continue to form bullish patterns, investors are likely to take notice and allocate more capital to these assets, further fueling the altseason.

The strengthening of the altseason signal is also supported by the overall market trends and investor sentiment. As more traders and investors recognize the potential of altcoins, the demand for these assets is likely to increase, driving up their prices. This positive feedback loop can lead to a sustained period of growth for altcoins, benefiting early investors who position themselves accordingly. However, it is important to note that the cryptocurrency market is highly volatile, and investors should exercise caution when making investment decisions.