- Patterns of USDT dominance indicate a possible forthcoming altcoin season, according to analyst forecasts.
- Solana’s waning metrics and performance suggest a bearish outlook, with market fundamentals failing to support a recovery.
The altcoin market has experienced significant fluctuations throughout 2024, peaking above $1.27 trillion in March before embarking on a steady decline. Since then, the market has created a series of lower highs and lower lows, signaling an overall bearish sentiment.
While there have been sporadic increases in valuation, they have not been enough to compensate for earlier losses this year. Recently, the altcoin market cap hit $921 billion late last month but has since dropped to $872 billion.
This downward movement has led to speculation regarding a potential altcoin season. A notable crypto analyst known as Moustache has expressed a positive outlook toward an upcoming altcoin season based on Tether’s (USDT) dominance analysis.
Technical patterns indicate a bullish trend for the altcoin market
On the social media platform X, Moustache pointed out that USDT’s dominance is currently forming an “ascending broadening wedge” pattern, which usually has bearish connotations.
Source: Moustache on X
The analyst emphasized that USDT has been stuck in this pattern for more than six months, proposing that this could indicate a bearish “backtest” phase. Following this, Moustache believes the anticipated “altcoin season” may surface, providing potential opportunities for altcoin investors.
For clarification, an ascending broadening wedge is a bearish reversal pattern with two diverging trend lines that widen as they ascend. This suggests increased market volatility and uncertainty. Typically, when an asset or indicator creates such a pattern, it signals the possibility of an impending downward breakout.
In terms of USDT dominance, a bearish breakout could imply a shift in capital back toward altcoins, possibly igniting an altcoin rally or “altcoin season.”
Solana as a case study
While the potential for an altcoin season emerges, a detailed analysis of key altcoins’ performance and fundamentals is essential to substantiate this possibility. For instance, Solana [SOL], a prominent altcoin in the market, has encountered significant obstacles in recent weeks.
Solana has shown a consistent decline in price and usage metrics over the past week. The altcoin’s value has fallen by 6.2% in the last seven days, with a further drop of 4.2% in the past 24 hours.
At the time of writing, SOL was priced around $141.51, indicating a bearish trend and raising concerns about its short-term prospects.
Even more alarming is the sharp decrease in Solana’s active addresses—a vital metric representing retail investor engagement and network activity.
Data from Solscan reveals a drastic drop in active addresses, plummeting from over 5 million last month to around 1.3 million currently.
Source: Solscan
This severe drop in active addresses signals waning interest in Solana’s network activities, likely due to reduced participation, lowered transaction volumes, and potentially decreasing confidence among retail investors.
Additionally, Solana’s open interest has also declined, dropping approximately 7% to a present valuation of $2.27 billion. Open interest represents the total number of outstanding futures contracts or options, and a decrease in this figure could indicate lower trading activity or reduced speculative interest in the asset.
Source: Coinglass
Alongside this, the open interest for Solana has fallen by 29%, currently standing at approximately $7.25 billion.
Read Solana’s [SOL] Price Prediction 2024–2025
This reinforces the notion of declining market interest in the asset, with decreased trading volumes adding to a more challenging market landscape for SOL.
In summary, with numerous declines observed in our case study of the altcoin market—SOL—it appears that while analysts like Moustache are seeing bullish momentum for the altcoin market, the fundamentals have yet to catch up with this bullish sentiment reflected in the technical analysis.
