Is it worth waiting for a fast altseason?

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The overall capitalization of the cryptocurrency market continues to decline amid the fall of bitcoin and other digital assets. On January 10, the indicator fell below $2 trillion for the first time since September 2021. This happened after the price of bitcoin at the moment reached $39.5 thousand. The asset fell by 10% over the month.

Against this background, altcoins continue to fall in price. For example, the price of Ethereum fell by 20% in a month, Binance Coin fell by 13% over the same period, and Solana fell by 24% over the past four weeks.

Individual projects show growth despite the overall market dynamics. For example, on January 16, the NEAR token updated its historical maximum above $20, having risen in price by 96% over the month. This happened against the backdrop of attracting investments in the amount of $150 million by the project.

RBC-Crypto experts explained what is happening with the alternative coin market and whether we should expect the onset of the “altcoin season” in the near future.

Not a hard fall

The current situation on the market should not be considered as the beginning of a protracted decline, says Viktor Pershikov, a leading analyst at 8848 Invest. According to him, there is no fundamental negative in the digital asset market, and the lack of growth is due to the tightening of the Fed’s monetary policy. Due to the actions of the regulator, many investors have “moderated their appetites” for digital assets, the analyst noted.

“Now the market is dominated by the risk-off scenario. In the context of the continued rise in prices on commodity and stock markets, crypto market participants prefer not to take risks, preferring more reliable instruments,” Pershikov explained.

No time for altcoins to rise

The onset of the “season of altcoins” in the current situation on the market is practically impossible, says Nikita Zuborev, senior analyst at Bestchange.ru. In his opinion, the rapid growth of altcoins begins at the end of the Bitcoin growth stage.

“At some point, the growth rate of bitcoin slows down and investors prefer to exchange it for altcoins, which puts even more pressure on bitcoin, but provokes an increase in the price of altcoins,” the analyst explained.

According to Zuborev, at the moment, bitcoin does not have such a margin of safety to withstand the outflow of capital into altcoins. In the event of a flow of capital into alternative coins, Bitcoin will begin to decline, which will lead to the fall of the entire market, the analyst claims.

Outlook for the year

In 2022, the altcoin market is able to outperform bitcoin in terms of growth, Pershikov predicted. In his opinion, if this happens, then most likely in the second half of the year, since the first months of this year the market will be in a wide range with both growth and price corrections.

According to Zuborev, the onset of a full-fledged “altcoin season” will depend on the dynamics of bitcoin. If the first cryptocurrency manages to update the historical maximum before the middle of this year, then there will be a high probability of a significant increase in alternative coins.

“Otherwise, market forecasts are disappointing and bitcoin, along with altcoins, will continue to move sideways until the second half of 2023,” Zuborev explained.

Mikhail Karkhalev, a financial analyst at the Currency.com crypto exchange, agreed that the prospects for the altcoin market will depend on the dynamics of bitcoin. According to him, individual coins will grow against the backdrop of positive fundamental news within the project.

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