Altcoin "Hibernation" – Is a Major Breakthrough Coming Soon?

Despite having a rather cautious view of the crypto market, analyst Charles Edwards from Capriole does not rule out the possibility of a strong growth cycle for altcoins – if Bitcoin maintains its dominance. According to Edwards, currently only about 5% of cryptocurrencies are trading above their 200-day moving average, based on models measuring strength and price momentum such as the Speculation Index and Crypto Breadth developed by Capriole. This is not a very optimistic signal for the altcoin market in the short term. However, he compared the current situation to the end of 2020 – when Bitcoin surged from $10,000 to $60,000 before the flow of money started to move into altcoins. The ideal condition for a true "altcoin season" to begin, according to Edwards, is when Bitcoin convincingly breaks its historical peak and continues to rise sharply – for example, reaching the price range of $140,000 – while altcoins are still "lagging behind". At that time, the market capitalization tends to "rotate" from Bitcoin to smaller coins. On the contrary, if an altcoin suddenly rises in price while Bitcoin is still fluctuating in a narrow price range, it is often a sign of the "last breath" of the crypto market before a strong correction – Edwards warns. In addition, he expressed skepticism about the effectiveness of traditional halving cycles. According to him, new factors such as spot Bitcoin ETF funds, capital flows from corporate treasuries, and the participation of organizations like MicroStrategy have weakened the role of miners in controlling supply. Nowadays, only about 2–3% of the new Bitcoin supply comes from mining activities, making the 4-year cycle less significant than before. Instead, the current market is led by large institutions and companies, which may reduce the likelihood of deep corrections of up to 80% as seen in the past. However, this also increases the risk of systemic leverage (systemic leverage) – especially if publicly listed companies with a large Bitcoin stake fail to meet their plans. This is a long-term risk that needs to be monitored, Edwards emphasized. He also noted that gold is a strategic hedge tool, not a substitute for Bitcoin. History shows that both gold and Bitcoin tend to increase in price when the gold-to-equity ratio ( exceeds the 200-day moving average – an indicator that Capriole monitors regularly. Finally, he emphasized the importance of identifying a few key macro factors that are coordinating the market: the pivot of the U.S. Federal Reserve )Fed(, the expansion of global liquidity, and the structural change in capital flows. "We tend to react instinctively to negative news, but what needs to be done is to narrow down and focus on the forces that really coordinate the market – and right now, Bitcoin is gaining an advantage from those factors," Edwards concluded.