The Altcoin Season Index jumped to 24 on the first main trading day of the year as Bitcoin and most altcoins turned green, and the market capitalization of all coins crossed the important resistance level at $3 trillion.
Altcoin Season Index Has Rebounded
The Altcoin Index has risen to its highest point since December 4 last year, and is up sharply from the December low of 14. At the same time, the Fear and Greed Index jumped to 34, the highest point since August 28 and much higher than last year’s low of 8.
The rally happened as the crypto market rallied, with Pepe Coin soaring by 32% to its highest level over a month. Other top gainers were tokens like Floki, Pudgy Penguins, Shiba Inu, Bonk, and Toncoin rising by over 12%.
Therefore, there is a likelihood that the altcoin season may happen if the Crypto Fear and Greed Index rises and moves to the greed zone.
One potential catalyst for the season will be the Federal Reserve, which is expected to continue cutting interest rates this year as Donald Trump has pledged to hire a Fed official who supports his mission. Lower interest rates and quantitative easing are bullish for risky assets like Bitcoin and altcoins.
READ MORE: Chainlink Price Prediction as Strategic LINK Reserve Buying Soars
Another potential catalyst for the altcoin season is rising futures open interest, which moved to $135 billion, the highest level in over a week.
The Risk is that This Could be a Dead Cat Bounce
However, as we warned here, there are risks that may prevent an altcoin season. For one, as the chart above shows, the market capitalization of all cryptocurrencies excluding Bitcoin and Ethereum has formed a double-top pattern at $1.16 trillion and a neckline at $663 billion. A double-top is one of the most common bearish continuation patterns in technical analysis.
Also, as we noted before, there is also a risk that the ongoing altcoin rally is a dead-cat bounce, which is a temporary rebound that happens when an asset is in a freefall. One sign that this could be a dead-cat bounce is that Bitcoin has remained at the key resistance level at $90,000, where it has remained at in the past few weeks.
READ MORE: IREN Stock Short Interest Spikes as Wall Street Experts Remain Bullish
