Crypto analysts suggest that the significant weekend leverage flushout, which erased billions from the crypto markets, may have set the stage for “altseason 3.0.”
“Every major growth phase in crypto has seen sharp resets of 30% to 60%,” noted analyst and researcher “Bull Theory” on Monday.
In March 2020, markets saw nearly 70% erased during the pandemic-induced crisis, and May 2021 experienced a loss of over 50%. At least five additional altcoin declines of 30% to 40% occurred during the previous bull market cycle.
The market crash in April this year led many to declare the onset of a bear market. However, “each of those declines appeared to signal the end [and] each was succeeded by the strongest rallies of the cycle,” the analyst added.
Altcoins Expected to Recover
Typically, altcoins suffer the most during these dramatic market corrections, and this weekend was no exception with XRP (XRP) dropping 18%, Solana (SOL) 22%, Dogecoin (DOGE) 28%, Cardano (ADA) 25%, and Chainlink (LINK) 26% in just a day.
After the March 2020 flash crash, “we saw a remarkable altseason where altcoins surged 25x to 100x,” mentioned analyst Ash Crypto, adding, “I believe it will occur once more.”
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Meanwhile, analyst “Merlijn The Trader” identified a setup for “altseason 3.0” with a bullish monthly MACD cross on the BTC/altcoins chart, mirroring the pattern seen in 2017 and 2021.
Total Crypto Market Cap Drops Below $4T
The total crypto market capitalization fell back below the crucial $4 trillion level on Tuesday, despite optimistic views on recovery and a potential altseason.
Bitcoin (BTC) has taken the lead in losses with a 1.4% drop for the day, falling below $113,500 on Tuesday morning, even as several altcoins reported daily gains.
Additionally, Bitcoin dominance, an important indicator of altcoin performance, is showing its first red weekly candle in five weeks as it dropped below 59% on Tuesday, according to TradingView.
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