The altcoin market is showing signs of a potential bullish breakout, with Chainlink hinting at a market upswing.
- The altcoin market cap is rebounding, and the Altcoin Season Index suggests a bullish breakout is imminent. Chainlink shows mixed performance, but its open interest is rising, indicating growing market interest.
After dipping to as low as below $800 billion early last month, the overall altcoin market cap valuation is now beginning to see a rebound since the month of October began.
Particularly, over the past few days, the global altcoin market cap valuation has seen gradual uptick with a current valuation of $906 billion, at the time of writing.
Altseason is here?
Amid this performance, a crypto analyst known as Moustache on X, suggests that an altcoin season could be imminent.
In a recent post, Moustache shared that the Altcoin Season Index, which measures the relative performance of altcoins against Bitcoin, appears to be forming a bullish Inverse Head & Shoulders pattern.
This pattern, typically considered a strong indicator in technical analysis, is nearing a breakout point, potentially setting the stage for significant movement in the altcoin market.
Moustache emphasizes that the next few weeks and months could present major opportunities for gains, as the index completes its bullish formation and potentially initiates a trend reversal.
Source: Moustache on X
For context, in technical analysis, an Inverse Head & Shoulders pattern is considered a bullish signal, often pointing to a reversal in a downward trend. The pattern typically consists of three troughs: a “head” between two “shoulders,” with the head being the lowest point.
Once the price breaks through the neckline formed by connecting the peaks of the two shoulders, it often signals a potential upward breakout. For the altcoin market, this breakout could mean a shift from the current consolidation to a more expansive rally, driving significant gains across various altcoins.
Moustache’s observation regarding the Altcoin Season Index aligning with this pattern suggests that market sentiment may soon favor altcoins over Bitcoin, indicating a shift in capital flows.
However, while these technical indicators are encouraging, it’s also crucial to look at individual altcoin performance to gauge the broader market movement.
Assessing altcoin performance: Chainlink as a use case
To understand the potential of an altcoin market rebound, it’s important to analyze specific altcoins, such as Chainlink (LINK), which ranks among the top 20 cryptocurrencies by market cap.
Despite experiencing a 5.5% decline over the past week, LINK maintains an overall bullish outlook, having gained 16.3% over the past month. Moreover, LINK has shown positive movement in the last 24 hours, with a price increase of around 2% to $11.56.
Delving into LINK’s fundamentals reveals key insights into the altcoin’s market sentiment and activity. Data from Glassnode highlights a downward trend in LINK’s active addresses, a key metric indicating retail participation.
Source: Glassnode
After reaching a high of 5,738 active addresses in August, the number has since decreased to around 1,809. This decline suggests a reduction in retail activity and engagement, which may reflect broader trends in altcoin retail participation.
However, LINK’s open interest presents a more optimistic view. According to data from Coinglass, LINK’s open interest has increased by approximately 4%, reaching a valuation of $165.86 million.
Source: Coinglass
The open interest volume, which tracks the total number of open positions on derivative contracts, has also surged by 31.96%, reaching $198.27 million.
The rise in open interest may indicate growing investor interest and confidence in the asset, potentially supporting the broader case for a forthcoming altcoin season.
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