Recent market analysis from Bull Theory indicates that altcoins may be entering a phase of early stabilization, even as Bitcoin experiences a significant decline. In November, Bitcoin has fallen by 24.15%, yet the ALT/BTC ratio has risen by 9.44%, a divergence that is rarely observed during a downturn in Bitcoin.
Bull Theory elaborated that this unexpected trend typically emerges only after what they describe as “altcoin seller exhaustion.” This is a situation where the altcoin market undergoes heavy capitulation before Bitcoin completes its correction. October”s market dynamics displayed a “complete washout” in altcoins, followed by a gradual upward trend, despite Bitcoin”s continued decline.
This relative strength in altcoins occurs as Bitcoin approaches what analysts suggest could be a local bottom, supported by multiple indicators of extreme oversold conditions. The daily Relative Strength Index (RSI) has reached its lowest point in two years, while the weekly RSI has reverted to levels seen in January 2023. Furthermore, the daily Moving Average Convergence Divergence (MACD) is at its lowest recorded level.
If Bitcoin is indeed nearing a stabilization point, historical patterns indicate that two outcomes commonly follow: the asset may shift into a period of sideways consolidation or begin a slow reversal, while altcoins typically start to outperform in both BTC and USD trading pairs. Importantly, the analyst pointed out that a sudden bullish reversal in Bitcoin is not required; rather, the cessation of ongoing downward pressure could suffice. Even in a flat Bitcoin environment, sharp moves in altcoins have occurred in the past once leverage resets and forced selling subsides.
Interestingly, Bitcoin”s market dominance is finding it challenging to trend higher, which is atypical during a Bitcoin-led market downturn. The observed weakness in dominance amidst Bitcoin”s drop suggests that liquidity is no longer flowing solely toward Bitcoin, but is instead being redirected to higher-beta assets. While not explicitly stating that an altseason is imminent, Bull Theory believes the current market conditions resemble the phase just before altcoins start to outperform.
