Will Altcoins Experience a Repeat of Historical Drops Before a Rally?

Analysts in the cryptocurrency space have spotted historical trends indicating that significant market drops often precede substantial rallies in altcoins. This suggests that another ‘altseason’ could be on the horizon.

Crypto experts speculate that the recent massive liquidation over the weekend, amounting to billions lost in the crypto market, might set the stage for the anticipated ‘altseason 3.0’.

“Every major expansion in crypto has included sharp 30% to 60% resets along the way,” noted analyst and researcher Bull Theory.

Following previous market events such as the pandemic flash crash in March 2020, where nearly 70% of market value evaporated, and a more than 50% drop in May 2021, the altcoin landscape tends to rebound robustly after such resets.

The market downturn in April raised concerns about an emerging bear market; however, analysts suggest that each drop was mistakenly perceived as the endpoint, only for strong rallies to follow.

Altcoins Will Bounce Back

Historically, altcoins tend to suffer the most during these significant market corrections. Recent figures showed drastic declines in major altcoins: 18% for XRP, 22% for SOL, 28% for DOGE, 25% for ADA, and 26% for LINK within just one day.

“After the March 2020 flash crash, we had a huge altseason where altcoins pumped 25x to 100x,” stated Ash Crypto, expressing confidence in another surge.

Source
The previous bull market had multiple altcoin market flushes. Source: Bull Theory

Moreover, analyst Merlijn The Trader confirmed a setup indicating ‘altseason 3.0’, with a bullish monthly MACD crossover seen in BTC against altcoin charts, mirroring patterns from 2017 and 2021.

Total Crypto Cap Dips Below $4 Trillion

On Tuesday, the overall cryptocurrency market capitalization fell back below the crucial $4 trillion threshold, despite optimistic sentiments surrounding recovery and a forthcoming altseason.

Bitcoin (BTC) is taking the lead on declines, falling by 1.4% to under $113,500 as of Tuesday morning, while several altcoins are realizing daily gains. Concurrently, Bitcoin’s dominance—a key measure of altcoin performance—has shown its first decline in five weeks, dipping below 59%, as noted by TradingView.