Markets
Altcoin Market Capitalization Defends $850B Support, Next Resistance at $1.2T ⋆ ZyCrypto
The overall market cap of altcoins (all cryptocurrencies except Bitcoin) has been volatile for the most part over the past few weeks. The secondary cryptocurrency market, often criticized for its volatility, lived up to its reputation by recording a 20% decline in the first five days of this month before recovering strongly in the last 72 hours. However, it successfully defended its $850 billion valuation before recovering above $950 billion yesterday.
This secondary market rollercoaster has been a key factor in the cryptocurrency market’s recent descent into Fear, Uncertainty, and Doubt (FUD). The bullish enthusiasm generated by spot Bitcoin Exchange Traded Funds (ETFs) approval in January has largely dissipated. Bitcoin, the largest cryptocurrency by market cap, was expected to remain above $60,000 for the foreseeable future before an eventual recovery in the third and fourth quarters of this year. Since the altcoin market typically follows the gains of the leading digital currency, it was also expected to remain sluggish.
Altcoins respond to selling pressure
However, the Surprise BTC sale by German government and Mt. Gox’s compensation payment turned the market upside down at the end of Q2. Entering July cautiously, the digital currency space witnessed a dramatic sell-off, with BTC plummeting below $54,000 within a week. The secondary market fared even worse, dragged down by Bitcoin’s decline. Fortunately, both markets managed to stabilize and partially recover by the end of the second week.
Here is a chart of the altcoin market since the beginning of the month:
However, if we zoom in to better understand the situation, here is the graph since mid-2021:
According to According to popular crypto analyst Michael Van de Poppe, the altcoin market has established a long-term bottom around $500 billion and is unlikely to test that level any time soon. However, the local bottom is around $850 billion, and the bulls are likely to mount their defense soon if subsequent bearish forecasts are to be believed.
Other price corrections
At its current price of $59,900, a further drop in Bitcoin to $50,000 would also likely trigger significant losses in altcoins. In such a scenario, the secondary market is expected to be valued at $700 billion, which could translate into up to 30% of altcoin losses. However, if the market can withstand significant selling pressure, it could stabilize above $850 billion. Next resistance level stands at $1.23 trillion, reached in early April. A rise beyond this point could usher in a new altcoin season and potentially new all-time highs.