The cryptocurrency market is beginning to show the first signs that a new season of altcoins could be getting closer, as analysts reference historical patterns and technical signals that hint at a rebound after a long decline. Although altcoins have lagged Bitcoin recently, bullish factors stemming from data and macroeconomic parallels are generating optimism that a change in liquidity conditions could trigger a strong market-wide rally for altcoins.
Altcoin dominance hits record oversold levels
According to crypto analyst Javon Marks, the altcoin domain has entered oversold conditions for the first time in history. Marks highlighted in his post that the indicator, which measures the market share of all altcoins, is now more oversold than ever.
The OTHERS.D chart shows the market dominance percentage of all cryptocurrencies except the top 10 by market capitalization. It is a measure of the combined market share of smaller altcoinssy can be used to identify broader altcoin rallies. His long-term chart of the OTEHRS.D movement spans over a decade, with each major low followed by an extended period of recovery and massive market gains.
The chart reveals that the dominance has decreased sharply from its peak of around 20% in 2021. At the time of writing, OTHERS.D’s dominance is around 7%. A wave trend indicator at the bottom of the chart is in deeply negative territory, around negative 50%, which is the lowest in history.
Marks noted that these oversold conditions often precede sharp pullbacks. It means that the selling pressure has run out and a major rally could begin soon. If this pattern repeats itself, altcoins may be entering one of their most attractive accumulation phases in years.
Total cryptocurrency market capitalization excluding top 10 dominance. Source: Javon Marks at X
The Federal Reserve’s monetary changes and their impact on cryptocurrency liquidity
Another technical perspective came from analyst Ted Pillowswho compared current market conditions to the 2019-2020 cycle when the Federal Reserve ended quantitative tightening (QT) and then resumed quantitative easing (QE). Your graph of the total cryptocurrency market capitalization excluding Bitcoin shows a decrease of 42% following the end of QT in late 2019, followed by an explosive recovery after the Federal Reserve initiated QE in March 2020.
Pillows explained that while ending QT may ease financial pressure, it does not directly inject liquidity into the economy, something that altcoins need to recover. In contrast, QE or Treasury General Account (TGA) releases flood the market with liquidity and allow for capital inflows into cryptocurrencies.
He noted that ending QT is not enough for alts to recover. Either the Fed starts another QE or the Treasury releases TGA liquidity into the economy. The most feasible option right now is the second.
Total cryptocurrency market capitalization excluding BTC. Source: Ted Pillows on X
With the US government currently in closuresuggested that a TGA-driven liquidity release may occur once the fiscal impasse is resolved, and this will serve as the next major driving force for the altcoin market.
Featured image created with Dall.E, chart from Tradingview.com
