The cryptocurrency market is starting to show early signs: new altcoin season That time may be near, as analysts cite historical patterns and technical signals that suggest a recovery after a long period of weakness. Altcoins have lagged behind Bitcoin recently, but bullish factors from data and macroeconomic parallels are increasing optimism that changing liquidity conditions could spark a strong market-wide rally for altcoins.
Altcoin dominance reaches record oversold levels
According to cryptocurrency analyst Javon Marks, altcoin dominance has entered an oversold situation for the first time in history. In his post, Marks highlighted that the indicator, which measures the market share of all altcoins, is currently the most oversold it has ever been.
The chart OTHERS.D shows the market dominance of all cryptocurrencies except for the top 10 by market capitalization. This is a guideline for Total market share of small altcoinss and can be used to identify broader altcoin rallies. His long-term chart of OTEHRS.D trends spans more than a decade, with each big low followed by a long recovery and big market rally.
This graph shows a sharp decline in dominance since a peak of about 20% in 2021. As of this writing, OTHERS.D has an advantage of approximately 7%. The wave trend indicator at the bottom of the chart is in deep negative territory around -50%, which is an all-time low.
Marks noted that these oversold conditions often precede strong reversals. This means that the selling pressure is gone and a big rebound could begin soon. If this pattern repeats, altcoins could enter one of the most attractive accumulation phases in years.
Total market capitalization of cryptocurrencies excluding top 10 dominance. Source: Javon Marks of X
Changes in Fed monetary policy and impact on virtual currency liquidity
Another technical perspective Comment from analyst Ted PillowsHe compared current market conditions to the 2019-2020 cycle, when the Federal Reserve ended quantitative tightening (QT) and then resumed quantitative easing (QE). Graph of market capitalization of virtual currencies excluding Bitcoin shows a decrease of 42% After the end of QT at the end of 2019, an explosive recovery ensued after the Federal Reserve began quantitative easing in March 2020.
Pillows explained that while the end of QT may ease financial pressures, it will not directly inject the liquidity into the economy needed for altcoins to rally. In contrast, QE or Treasury General Account (TGA) releases flood the market with liquidity, allowing inflows into cryptocurrencies.
He pointed out that ending the QT alone is not enough to rally alternative players. Either the Fed starts new QE, or the Treasury releases TGA liquidity into the economy. The second option is currently the most viable option.
Market capitalization of virtual currencies excluding BTC. Source: Ted Pillows On X
with the US government Currently shutting downHe suggested that a TGA-led liquidity release could occur once the fiscal impasse is resolved, which would be the next big driver for the altcoin market.
Featured image created by Dall.E, chart on Tradingview.com