Altcoins May Be Forming a Stabilization Zone, Preparing for a Short-Term Rebound
In the aftermath of mid-October’s widespread deleveraging in the derivatives market, many altcoins have experienced sharp declines. However, analysts now believe that several indicators suggest that altcoins may be forming a stabilization zone and preparing for a short-term rebound in November. This analysis delves into the signs that analysts point to as evidence of this potential recovery.
Stabilization Zone Forms, Prices Fluctuate Within Range
The Fear and Greed Index has remained at 29 for three consecutive weeks since the liquidation event on October 11. This persistent fear has caused investors to hesitate in making long-term commitments. However, most altcoins have now formed stable price ranges without setting new lower lows. Evidence supports this view as the OTHERS/BTC chart (which represents the value of all altcoins excluding the top 10, compared to Bitcoin) dropped sharply from above 0.14 in September to below 0.12 in October. Despite this decline, this chart has now shifted into a "Stabilization" phase, indicating that prices are starting to fluctuate within a stable range.
Signs of Price Stabilization
According to Altcoin Vector, an account known for institutional-level reports from Swissblock, the OTHERS/BTC chart has entered a stabilization zone. This is reflected in the chart’s shift into a "Stabilization" phase, where prices are starting to fluctuate within a stable range.
- The OTHERS/BTC chart provides strong evidence of price stabilization.
- The chart’s movement indicates that prices are no longer declining but are instead consolidating around a stable level.
- This stabilization is crucial in forming the foundation for potential short-term rallies or even true altcoin seasons.
WIF/USD as a Representative Example
The WIF/USD (the value of altcoins, excluding the top 10, compared to the US dollar) serves as a representative example. It shows a reaction closely aligned with the broader trend and is seen by some analysts as an indicator of potential recovery.
- As prices fluctuate within this range, there’s potential for relief rallies to help alleviate downside pressure.
- According to Altcoin Vector, if the stabilization zone holds as support, we could see short-term alt rallies that are neither true seasons nor a complete reversal but rather short-term relief moves.
Optimism from Other Analysts
Other analysts take an even more optimistic view regarding the possibility of a true altcoin season in November. They base their expectations on trends and historical data, particularly the OTHERS/BTC chart’s comparison to previous market lows.
The Other Side of the Story: A More Bullish Perspective
Michaël van de Poppe, founder of MN Fund and a macroeconomic analyst, views the same OTHERS/BTC chart differently. He sees it as one of the most valuable charts in today’s market, offering insights into potential future trends.
- Van de Poppe notes that altcoins are currently undervalued at levels comparable to previous market bottoms, such as Q4 2016 and Q1 2020.
- In both those historical periods, major rallies followed. The market experienced an explosive altcoin season in 2017, with Ethereum and other altcoins surging hundreds of times.
- Similarly, a full-scale bull run unfolded after the pandemic.
Further Signs of Recovery: RSI Indicator
Analyst Javon Marks also draws attention to another indicator supporting potential recovery – the RSI (Relative Strength Index) indicator on the "Others Dominance" chart. This chart measures the market share of non-top-10 altcoins relative to the total crypto market.
- The RSI has entered an extremely oversold zone – a level that represents the deepest oversell recorded in history.
- Marks interprets this as indicating exhaustion of seller pressure, thereby setting up conditions ripe for either a bounce higher or reversal.
Conclusion
Several leading analysts expect a potential recovery for altcoins in November. They base their analysis on signs such as the stabilization phase and RSI indicators providing evidence of exhaustion. Historically, altcoin seasons often begin around November; however, current market sentiment remains cautious. Even with caution lingering among investors due to recent interest rate cuts by the Federal Reserve, a recovery may still be possible.
However, caution is advised in this environment, as a similar dynamic prevailed during past cycles. If altcoins continue on their stabilization trajectory, there may potentially be significant price movements ahead – however these do not necessarily represent ‘true seasons’.