Following a robust rally in December, where the cryptocurrency market showed significant strength after a prolonged phase of losses and consolidation spanning this year and the previous one, it appears to be time to consider investing in altcoins.
Initially, the markets have exhibited substantial momentum recently, particularly within the Injective (INJ) and Solana (SOL) ecosystems. This momentum has been further propelled by airdrops, as renowned crypto analyst Michael van de Poppe noted in his post on X on December 21.
His claims align with the technical metrics, as most digital assets are experiencing a resurgence, exemplified by Cardano (ADA) briefly surpassing $0.61 and Solana nearing the impressive milestone of $100. It is advisable to closely monitor the movements of Ethereum (ETH), Shiba Inu (SHIB), Fetch.ai (FET), and Dent (DENT).
Altcoins resurgence chart. Source: Santiment
Reasons for investing in altcoins
The broader crypto market is anticipating a shift focusing on Ethereum, which could lead to a domino effect of price surges in other altcoins. This transition is expected to unfold predominantly in the first quarter of 2024, possibly from the end of December onwards.
Various factors contribute to this phenomenon. “Before the halving event, a crucial juncture emerges approximately 3-8 months ahead, representing a period when altcoins are deemed most undervalued. Consequently, this timeframe inversely offers the most favorable investment opportunity within the cycle,” as per van de Poppe.
Chart of possible pattern repetition in altcoins. Source: Michael van de Poppe
The potential approval of the Spot ETF on Bitcoin (BTC) is largely factored into the market as the event draws near. This implies an anticipated reduction in volatility, prompting capital to shift from BTC to other cryptocurrencies. As the immediate alternative to flagship crypto, Ethereum is positioned to attract a significant portion of this capital flow.
Seasonality significantly influences investment dynamics. The first quarter proves favorable for altcoin investments, supported by historical data, as seen from a post by crypto analyst Jelle on December 19.
Impact of seasonality on Bitcoin price. Source: Jelle
Towards year-end, markets witness rebalancing as investment funds adjust portfolios for tax and risk reasons. As the new year commences, these dynamics reverse, with funds entering the market with fresh allocations.
