Altcoin Season Awaited, But Correction Looms

The crypto market's next altcoin season is eagerly awaited by traders, but some experts predict a significant correction before the rally begins. The current market favors Bitcoin, with altcoins struggling, particularly those outside the top 10. The total market cap of these altcoins has dropped by 77% from their November 2021 peak of $492 billion to a three-month low of $277 billion.

Crypto analyst Il Capo believes that altcoins may experience a 20%-40% drop before the real rally starts, with meme coins facing even steeper losses. He expects Bitcoin to dip by 15%-20% to levels around $80K-$85K, while stronger altcoin projects could correct by 20%-30% and weaker ones by 30%-40%. Meme coins, known for their extreme volatility, might see losses as deep as 50%-60%.

Despite the potential shakeout, some analysts remain optimistic about the next altcoin season. Historical data suggests that these seasons usually occur 6-9 months after Bitcoin reaches its peak. With the next Bitcoin halving set for April 2024, a similar timeline is expected: a strong Bitcoin run through late 2024, followed by a shift into altcoins in early 2025.

Bitcoin dominance, currently around 60.6%, is another key indicator. When BTC dominance drops below 50%, it signals that capital is moving into altcoins. For altcoins to take off, Bitcoin must first peak and enter a stabilization phase, allowing traders to rotate funds into alternative assets. Ethereum is often the first to lead, so an ETH/BTC surge could indicate that the broader market is shifting. Retail hype, particularly around meme coins and emerging narratives, will also play a role in driving prices higher.

While some experts, like Raoul Pal, CEO of Real Vision, suggest that altcoins could take off soon, they also warn that investors need to be patient. The market's cycle may require a shakeout before entering the next explosive phase, making it crucial for traders to stay informed and adapt to the market's dynamics.