Key Insights
- Bitcoin has formed a golden cross, which is a great signal for a bullish comeback.
- Analysts say that altcoins are at historically oversold levels and are hinting at a reversal.
- Traders are watching RSI and moving averages for confirmation of a market bounce.
Bitcoin has formed a golden cross recently, which is a technical signal that is often linked to strong price rallies. This golden cross occurred just as the 50-day moving average climbed above the 200-day moving average.
At the same time, analysts are pointing out that the altcoin market is currently at its most oversold level in history.
This said, the general market could be looking towards a possible surge soon.
Altcoins are Oversold More Than Ever
While Bitcoin’s growth is showing strength, altcoins are telling a different story. Analysts recently noted that the altcoin market is at “its most oversold ever.”
The Relative Strength Index (RSI) readings on multiple timeframes have dropped below 30, and have confirmed that the market is indeed experiencing extreme selling pressure.
The Altcoin Season Index (ASI), which measures the margins between Bitcoin and altcoins, currently sits at 45/100. Historically, the altcoin market trended closer to the 50/100 mark just before major rallies in at least two past bull runs. Both periods saw altcoin dominance climb as capital rotated away from Bitcoin.
Ethereum is showing strength in particular. ETF inflows of more than $9 billion have boosted its market share to 57.3%. The ETH/BTC ratio has also broken out of a long-term range, which indicates that Ethereum may start to outperform in the next few months.
Solana has attracted $1.72 billion in institutional capital lately, while daily active users have risen by 20% despite lower prices.
These signs indicate that on-chain activity is holding firm, even during downturns.
Trading Implications and Price Levels to Watch
The golden cross alone is not enough to confirm a trend. Traders are still watching to see if Bitcoin can hold above the 200-day moving average with rising volume. This means that a strong move with strong support would validate the bullish signal.
Altcoin traders are also looking for an RSI rise above 30 while the price shows positive divergence.
This combination has historically come before selling exhaustion, and could be one to watch. On-chain data already backs this view and shows declining exchange reserves and increasing whale accumulation.
Ethereum currently trades near $4,500 and has daily trading volumes of $15 billion. This said, if the cryptocurrency continues to hold this level, a rally to $5,000 could come in the short term.
General Market Drivers
Macro conditions could be important for confirming the bounce. If the Federal Reserve shows signs of being open to a rate cut later in the year, liquidity could flow into risk assets like crypto.
Institutional adoption is another driver. Bitcoin ETFs now hold $139 billion in assets under management and have been providing steady inflows. Historically, rising Bitcoin liquidity tends to spill over into altcoins during bullish phases.
Correlations with traditional markets are also another metric to watch. Bitcoin’s current correlation with the S&P 500 stands at 0.7. This means that any positive movements in equities could spark gains across crypto.
What Traders Should Watch
Traders should track metrics like RSI recoveries, volume spikes and price divergences in Bitcoin and altcoins. Breakouts above resistance levels in ETH/BTC pairs could confirm a change in momentum toward altcoins.
Blue-chip projects like Ethereum, Solana, Chainlink and Uniswap may present safer entries compared to smaller tokens. These assets tend to recover faster during market rebounds and could be worth watching.
So far, the market setup in Q4 resembles conditions seen before earlier altcoin seasons. While there are still major risks, historical data shows that extreme oversold levels tend to come before powerful rallies.
If historical patterns repeat, the combination of a Bitcoin breakout and altcoin undervaluation could create some of the best opportunities in the market to date.
