Altcoins Hold Strong Amid Market Slide: Can They Still Recover?

The total market capitalization for all cryptocurrencies, excluding Bitcoin, suggests that the altcoins aren’t done yet. Approaching strong support, the Total2 chart provides hope that this bull market is not over yet.

Bitcoin will decide, but altcoins above major support

Source: TradingView

While Bitcoin (BTC) is at the very brink of a descent into potential bear market territory on Friday morning, the altcoin market cap is approaching its own strong support. A major horizontal support level and an ascending trendline are what remain between altcoins and what could be a spectacular collapse.

Obviously, Bitcoin will decide the ultimate destiny of the altcoins for this bull market cycle, and therefore it will all depend on whether the undisputed king of the cryptocurrencies goes into a full-scale bear market plunge, or whether its major ascending trendline will hold firm.

If the bearish scenario does play out, the altcoin market cap could go all the way down to $940 billion at the 0.618 Fibonacci level, or even $717 billion at the 0.786 Fibonacci extension.

The bullish scenario is that a bounce takes the price first to the $1.42 trillion resistance, and then to $1.55 trillion. The Stochastic RSI indicators are at the bottom and would therefore perhaps point towards the bounce.

USDT Dominance trend breakout

Source: TradingView

The USDT Dominance chart appears to be in favour of the bears. If the USDT stablecoins are increasing in dominance it means that they are not being exchanged into $BTC or altcoins. The above weekly chart reveals a potential breakout of a descending trendline that began in late 2022, i.e., at the beginning of the bull market. If this breakout confirms, that could also confirm the end of the crypto bull market. 

One hope the bulls still have to cling to is that the current weekly candle has just back-filled the previous week’s candle wick to the upside. It could potentially come back from here. This time the Stochastic RSI indicators are topping out, so this would probably point towards a decrease in USDT Dominance from here.

DXY rejection gives crypto market hope

Source: TradingView

Finally, we need to have a look at the Dollar Index (DXY). The DXY has a strong inverse correlation with the crypto market, given that as the dollar weakens against other major currencies, it enhances the appeal of non-fiat assets like cryptocurrencies. Also, as the dollar debases, more value is sucked into scarce and hard money like Bitcoin, which is then diffused through the crypto ecosystem.

The above weekly chart shows that the DXY is between multi-year trendlines and has just been rejected from the strong $100 horizontal resistance level. A weak dollar is part of President Trump’s economic strategy, therefore, unless there are any major black swans, it might be expected that the dollar continues to weaken now. Once again, the Stochastic RSI is giving the signal of a potential major downturn.

Conclusion

To conclude, the current dire market sentiment for crypto may be deserved, but there are signs that a turnaround could be in the cards. The altcoin market, and Bitcoin specifically, need to survive this week. At time of going to press, the $BTC price has dipped under the major trendline and has fallen to $95,700. Unless the price gets back above the major trendline, and soon, there could be a whole world of hurt still to come for crypto.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.