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Altcoins are demonstrating resilience as the cryptocurrency market starts to recover from a significant correction in February. This recovery has led to an increase in the total crypto market cap after rebounding from the $3 trillion mark on February 2.
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Despite the correction that caused the altcoin market cap to drop significantly after hitting $425 billion, there are signs that bulls are gaining momentum in the altcoin space. Crypto analyst Rekt Capital pointed out that the recent pullback in altcoin market capitalization is not as severe as in previous downturns, indicating a potential shift in market sentiment.
Altcoins: Market Cap Faces Resistance at $425 Billion, Yet Shows Strength
Rekt Capital’s technical analysis highlights the significance of the $425 billion resistance level for the altcoin market, specifically focusing on altcoins outside the top 10 by market capitalization. This analysis comes amidst an overall downturn in the altcoin sector over the past week, following a correction that began in early January when the market cap peaked at around $440 billion.
Despite facing strong resistance at $425 billion, the current retracement is less severe compared to previous corrections. The recent pullback is around 50% from the resistance level, whereas previous downturns experienced declines of 69% and 85%. This milder retracement suggests a potential change in the direction of the altcoin market.
The weakening resistance at $425 billion indicates that bearish momentum may not be as strong as in previous cycles, signaling a growing market resilience to sell-offs.
Implications for an Altcoin Season
Rekt Capital’s analysis aligns with the anticipation of investors looking forward to an altcoin season. The shallow pullback from the $425 billion resistance level strengthens the argument for a potentially more favorable altcoin season compared to previous cycles.
Analysts are eagerly awaiting a shift in market dynamics where profits from Bitcoin flow into altcoins, potentially leading to altcoins outperforming Bitcoin.
Another analysis by Rekt Capital highlighted a recent rejection of Bitcoin dominance around 64%, indicating a potential shift towards an altseason. However, Bitcoin dominance remains strong for now, and a full-fledged altcoin season has yet to materialize.
Conclusion
While the altcoin market shows signs of strength and potential for a season, Bitcoin dominance continues to play a significant role in market dynamics. Altcoin investors may need to exercise patience until a clearer reversal in dominance occurs.
Featured image from Pexels, chart from TradingView