The altcoin sector could be poised for a robust rebound after January's sell-offs, potentially outperforming Bitcoin.
Altcoin Recovery and Bitcoin's Role
According to data from Alphractal analytics platform, the Altcoin Season Index is at a critical point, potentially fueling a short-term recovery for the sector. Historically, this index has bounced back whenever it hit the lower range, typically following Bitcoin's lead. The recent increase from under $90k to $97k for BTC could stimulate the sector. However, another popular altcoin traction indicator from Blockchain Center is currently neutral, meaning the market could swing either way. Nonetheless, BTC currently holds an upper hand, especially considering the potential pro-crypto updates that might follow recent political events.
Prospects for Altcoins
To assess the future of the altcoin sector, it's helpful to examine BTC and Tether's USDT dominance. Both are inversely related to altcoin momentum, indicating that a decrease in BTC and USDT dominance could signal a capital shift to altcoins with increased buying pressure. This was observed during the altcoin pump in November, which corresponded with a drop in BTC and USDT market dominance. Currently, BTC.D has reached a trendline resistance, while USDT.D appears to be retreating lower. If both indicators continue to decline over the next few days, Alphractal's projection could be confirmed.
What to Expect Next?
Some top altcoins, such as XRP and Hedera (HBAR), have already outperformed BTC. Over a 90-day period, XRP and HBAR's values increased by 450% and 600% respectively, while BTC only saw a 52% gain. This may indicate further prospects for altcoins.
Analysts continue to monitor developments in the altcoin market. Their recovery depends on various factors, including changes in BTC and USDT dominance. In the near future, the market may experience significant shifts determining its further dynamics.
