The Altcoin Season Index jumped to 24 on the first trading day of the year as Bitcoin and most altcoins turned green, and the market capitalization of all coins crossed the important $3 trillion resistance level.
Altcoin Season Index Has Rebounded
The Altcoin Index has risen to its highest level since December 4 last year and is up sharply from its December low of 14. At the same time, the Fear and Greed Index jumped to 34, the highest level since August 28 and well above last year’s low of 8.
The rally came as the crypto market advanced, with Pepe Coin soaring 32% to its highest level in a month. Other top gainers included tokens like Floki, Pudgy Penguins, Shiba Inu, Bonk, and Toncoin, which rose by over 12%.
Therefore, there is a likelihood of an altcoin season if the Crypto Fear and Greed Index rises and enters 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.
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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 earlier, some risks 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 this could be a dead-cat bounce is that Bitcoin has remained at the key $90,000 resistance level, where it has been for the past few weeks.
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