Altcoins surge as Bitcoin consolidates above $51k, analyst says market is on cusp of altseason

Cryptocurrency traders showed altcoins some love on Thursday as Bitcoin’s (BTC) continued consolidation above $51,000 pushed many to rotate into low-cap tokens, with artificial intelligence-related projects catching a bid thanks to a stellar earnings report from Nvidia (NVDA). 

Stocks also benefited from Nvidia’s earnings blowout, with both the S&P 500 and Dow Jones hitting new record highs in intraday training, while the Nasdaq had its best day in more than a year and is approaching record-high territory for the first time since November 2021. 

At the closing bell, the three major indices were all in the green, with the S&P gaining 2.11%, the Dow increasing 1.18%, and the tech-heavy Nasdaq finishing up 2.96%.

Data provided by TradingView shows that Bitcoin briefly broke below support at $51,500 near midday, dropping to a low of $50,900 before bulls managed to regain the support level. In the afternoon, bulls looked to push the price action higher and managed to elevate the BTC price to a daily high of $52,080. 

BTC/USD Chart by TradingView

At the time of writing, Bitcoin trades at $51,808, an increase of 1.4% on the 24-hour chart. 

Crypto traders rotate their positions

“The markets have been going through a tremendous run as Bitcoin has accelerated from $25,000 to $53,000 in three months,” said Michaël van de Poppe, founder and CEO of MN Trading. “In the meantime, other ecosystems have also been showing a ton of momentum, with the biggest winners being Solana, Injective Protocol, and Render Protocol.”

This has led to the inevitable debate about whether Bitcoin’s price is topping in the short term, which he said is a signal that traders should rotate into altcoins. 

“A few things should be considered when we’re discussing this topic,” Poppe said. “Strength topping out isn’t a sign of a top bull market; it’s just that, in short, the valuation of Bitcoin is overpriced and needs to come back to reality, according to the markets.” 

“For instance, right now, the markets have been rushing up by 100% in one go, which usually isn’t a trigger for a large group of investors to step into the markets, and they’d instead be waiting for a correction to happen,” he said. “The question is, how are you defining investors? In this case, it is not by the number of investors but by liquidity being interested in entering the markets.” 

“On the other hand, Bitcoin’s inflow is positive for the markets as the ETF inflow shows additional interest from institutional parties to get into the markets,” Poppe noted. “That’s good. However, they are not the only ones in the markets, and they are not pushing the valuation of Bitcoin on their own.”

He said that while the ETFs are playing a significant role in the price action, they are not the only variables to consider in how to approach the market moving forward. 

“It’s more likely that we’ll be seeing organic corrections taking place and a longer cycle due to them,” he said. “Rotations happen based on macroeconomic events rather than crypto-native events, so things like CPI, FOMC, GDP, and liquidity will be market-movers rather than [fair value gaps].” 

“Additionally, the halving event is going to have its impact,” he said. “Usually, there’s a short-term peak before the halving, resulting in the standard 20-40% correction before the continuation of the market.” 

Poppe said that as the market approaches that correction, “that’s where the sweet spot lies for rotation into altcoins, and it seems we’re seeing the first signals.”

One metric that can provide insight into this cyclical pattern is Bitcoin’s dominance rate, he noted. 

“In every cycle, the dominance of Bitcoin has peaked prior to the halving,” he said. “Very understandable, as investors are rotating their profits from holding Bitcoin towards other assets to generate a higher ROI as there’s no event that’s going to push confidence within Bitcoin at all.”

In the past, this has led many projects to delay releasing any upgrades until after the halving as a way to maximize the price gains, he said. “Investors need confidence to jump into the markets and Bitcoin is the biggest asset for that. Once that one has finalized its run, that will be the moment where the rotation towards other ecosystems takes place.”

Poppe said the market is currently “on the edge” of entering into that stage.  

“We’re going to be topping out with Bitcoin relatively soon. A peak to $54-58K pre-halving and a harsh correction to $45-48K,” he warned. “That correction is going to be painful, but altcoins are going to feel less pain from that actual event as they are stronger in their BTC pairs -> money rotating towards altcoins is the confirmation you’re looking for.”

He added that recently, “Ethereum (ETH) has shown more strength than Bitcoin, and the entire ecosystem is on the edge of a breakout.”

“My gameplan is to take profits from Bitcoin and rotate towards Ethereum, but also ensure that I cover my position by increasing my USDT stack for a potential correction,” Poppe concluded. “If that correction happens, maximize the allocation towards the Ethereum ecosystem” and other trending altcoins.

Sea of green in the altcoin market

It was a breakout day for the altcoin market as only six tokens in the top 200 recorded losses, and none of those declined more than 1.7%. 

Daily cryptocurrency market performance. Source: Coin360

Ondo (ONDO) was the biggest gainer, increasing by 42.2% to trade at $0.458, followed by a gain of 41.9% for Worldcoin (WLD), and an increase of 39.2% for SingularityNET (AGIX). WEMIX (WEMIX) and Radix (XRD) were the biggest losers, declining by 1.65%, while Just (JST) fell 1.5%. 

The overall cryptocurrency market cap now stands at $1.99 trillion, and Bitcoin’s dominance rate is 51.3%.