Just a few days ago, only six out of the top 50 altcoins outperformed Bitcoin (BTC). But today, that has changed, fueling fresh speculation of an altcoin season.
The interesting part of this development is not only the addition of three new cryptocurrencies but also the fact that the new entrants are all in the top ten by market cap. They include Solana (SOL), Ethereum (ETH), and Ripple (XRP).
Is the Rotation to Altcoins High Risk, High Reward?
It is important to note that altcoin season starts when at least 75% of the non-Bitcoin cryptos perform better than BTC. Still, only nine are doing that, meaning that the altcoins’ dominance period has yet to be confirmed.
As mentioned above, the performance of SOL, ETH, and XRP is boosting the market’s confidence. Glassnode founders Jan Happel, Rafael Schultze-Kraft, and Yann Allemann also echo this assertion.
Using their joint X account Negentropic, the founders of the on-chain analytic platform, noted that the rotation of capital into riskier assets may soon begin in the crypto market.
Firstly, they compared the changes in the traditional market and used that as an inference for potential switches in the crypto market.
“Will we also see this is BTC and Alts? Well – in November 2020, we had a day just like yesterday. IWM soared and continued up for the coming months. This was the starting signal to the strongest part of the Alt-rally for the coming 4 months as Total3 rallied by ~400% in just 4 months. Will we see the same again? Will rotation create a massive rally in Alts? We think that may well happen!” Negentropic posted on July 12.
Furthermore, Solana, Ripple, and Ethereum’s entrance into the fold can be linked to their price action.
Over the last seven days, SOL’s price increased by 9.31%, ETH jumped by 9.56%, and XRP was the surprising gainer with an incredible 21.97% hike.
Here is how the cryptos may perform as the much-anticipated altcoin season nears.
Solana (SOL) Eyes Higher Prices After 9% Increase
The current SOL/USD daily chart shows that the altcoin has formed a symmetrical triangle. This chart pattern is characterized by converging trendlines which connect a series of lower highs and higher lows.
The lower highs act as resistance, while the higher lows act as support. In addition, the price of SOL is looking to break through the triangle. If this happens, Solana will exit the consolidation phase and head toward a huge breakout.
Furthermore, the Fibonacci Retracement indicator spots potential resistance and support points for the token. As seen in the chart below, SOL may elevate toward $162.79 in the coming days.
Read More: What Is Altcoin Season? A Comprehensive Guide
This is where the 0.618 Fibonacci positions. If successful, this can drive the altcoin price to retest $174.59. However, in the case of a pullback, SOL’s price can retrace to $135.97.
Ethereum (ETH) Breaches Key Resistance, Set for $3,622
At press time, ETH trades at $3,360. The price is also trading above the 20-day EMA (blue). EMA is an acronym for Exponential Moving Average, and it measures changes in price direction over a period of time.
If the EMA is above the price, it means the trend is bearish. But since ETH changes hands above the 20 EMA, it implies that the trend is bullish. Further, the Relative Strength Index (RSI) supports this bias.
The RSI measures momentum, and since it is above the neutral line, it means bulls are in control of ETH’s movement. Evidence of this is the break past the resistance at $3,255 and the defense at $2,946.
Should the momentum remain bullish and the hype around the spot Ethereum ETF launch persist, the price may reach $3,622. However, if selling pressure comes into play, ETH’s price may decrease to $3,132.
Ripple (XRP) Breaks Out of Descending Channel
Initially, XRP encountered a multi-month descending channel, with downward trendlines connecting lower highs and lower lows. However, analysis shows that the altcoin exploded after buying interest intensified at $0.42. This later led to the token’s hike to $0.53.
At press time, the Money Flow Index (MFI) reveals that high demand for XRP remains present. As such, it is not out of place to expect a price increase to $0.55. If successful, the price of XRP might reach $0.57.
Read More: 11 Cryptos To Add To Your Portfolio Before Altcoin Season
However, $0.57 is crucial for the token, especially as it has been rejected at this point a number of times. If bulls breach the resistance, Ripple can look toward $0.60. However, another rejection at this point may force the price back to $0.52.
All in all, it seems that the altcoin season for this cycle is getting closer by the day. However, traders in the market need to watch Bitcoin, considering that it has been able to reclaim $62,000.
If the price of BTC continues to increase and Bitcoin dominance jumps, this will invalidate a rise in the prices of altcoins.
Disclaimer
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