Why do recent dips signal the start of altcoin season?

Altcoins are showing signs of strength as the crypto market begins to recover from a significant correction in February. This recovery has pushed the total market capitalization higher after hitting the $3 trillion mark on February 2nd. The recent correction has caused the altcoin market capitalization to plummet after being rejected at $425 billion. However, according to analyst Rekt Capital, although the market was rejected at a strong resistance level, this drop is much smaller than previous corrections. Observation suggests that the bulls may be gradually gaining control of the altcoin market. Market capitalization is rejected but altcoins are consolidating strength Rekt Capital’s technical analysis emphasizes the importance of the $425 billion resistance level for the altcoin market, especially for altcoins outside the top 10. This analysis is conducted in the context of the volatile altcoin market over the past week, following a prolonged correction since the beginning of January, when the market cap reached its highest level in years at around $440 billion.

Despite altcoins being strongly rejected at this important resistance level, the depth of the recent correction is still significantly shallower than previous ones. The current correction has only decreased by about 50% from the $425 billion resistance level, while the two previous major declines were deeper at 69% and 85%. This mild correction indicates that a change in the altcoin market trajectory may be in effect. An important point drawn from the current trend is that the resistance level at $425 billion is weakening, indicating that the selling pressure causing the correction in the altcoin market is not as strong as previous cycles. Unlike previous cycles, when massive selling led to a catastrophic drop, current price action shows increasing resilience and recovery potential for the market. What does this mean for the altcoin season? Rekt Capital’s analysis aligns with the expectations of investors awaiting the arrival of altcoin season. The relatively shallow pullback from the $425 billion resistance further strengthens the argument that this altcoin season may outperform the previous two cycles. Analysts like Rekt Capital are eagerly anticipating the start of altcoin season, as profits from Bitcoin begin to shift towards altcoins and the altcoin market outperforms Bitcoin. In another analysis, Rekt Capital noted that Bitcoin’s dominance rate has recently been rejected around the 64% level. However, he also pointed out that history shows that rejections at the 64% level are usually temporary and actual rejection action will occur around the 71% level. When Bitcoin’s dominance reaches this level, history may repeat itself and lead to strong rejection dynamics, creating a typical altcoin season for the cycle. Currently, the dominance of Bitcoin is still strong and the comprehensive altcoin season has not yet appeared. Analysts like Benjamin Cowen believe that the expected altcoin price increase may be temporarily paused, with Bitcoin continuing to dominate the market’s liquidity. Until the dominance ratio becomes clearer, altcoin investors may have to wait for a while.