Altcoin Season 2024: 4 factors delaying the Altcoins rally

Altcoins are now active competitors in the cryptocurrency markets, providing investors with a variety of options beyond Bitcoin’s dominance. Although it is the leading cryptocurrency, Bitcoin, other alternative coins offer distinctive opportunities for growth and innovation. Nonetheless, altcoin surges frequently experience setbacks, leading investors to question the factors that influence these fluctuations. This article explores the main reasons for the delay in the altcoin rally.

1. Geopolitical tensions in the Middle East

The performance of Altcoins may be affected by various external factors such as global market sentiment, geopolitical tensions and macroeconomic events.
One of the predominant factors is the geopolitical tension in the Middle East, particularly the growing conflict between Israel and Iran which impacted the entire cryptocurrency market, including altcoins.

Usually, geopolitical conflicts generate uncertainties which result in increased market volatility. Investors respond to such events by moving their assets to safer investment havens. Therefore, the demand for riskier digital assets like altcoins is decreasing.

Additionally, geopolitical tensions can harm investor confidence. Concerns over escalating conflicts, cyberattacks and economic sanctions may prompt investors to become more cautious, leading to a sell-off in the crypto market.

After the incidents in the Middle East, the prices of Bitcoin and altcoins fell significantly. For example, on April 13, the price of Bitcoin saw a drop of more than 8.4%, following the Iranian attack on Israel. This led to globalization crypto market crashalso affecting altcoins.

2. The dominance of Bitcoin

Bitcoin dominates 53.21% of the cryptocurrency market, becoming the largest cryptocurrency by market capitalization. Investors may have become more cautious about investing in altcoins, losing confidence in the broader crypto market, following the decline in the value of Bitcoin, which fell 10% over the from last month.

Since it is recognized as the most established cryptocurrency, investors tend to focus on the performance of BTC. This diverts capital and attention away from altcoins. When markets fall, there is a tendency to shy away from risk, which causes the prices of altcoins to fall relative to Bitcoin.

Additionally, when the value of Bitcoin falls, it restricts new investments in the market and triggers negative sentiment in the market, thus affecting altcoins as well.

Historically, market circles have been driven by BTC price action, but currently the altcoin’s expected rally has been delayed due to BTC’s current underperformance.

3. Market cycles and timing

The cryptocurrency market is famous for its recurring patterns. Analysis of historical altcoin trends indicates that market cycles may become longer, which could delay the emergence of rallies compared to previous cycles.

Market cycles and timing play a crucial role in determining the performance and rally potential of altcoins. The current market downturn has left many altcoin traders with heavy losses, with over 85% of altcoins considered undervalued based on MVRV calculations. The market is waiting for the right moment to capitalize on these opportunities.

The altcoin market usually goes through phases during a bull market cycle, and it appears to be in the choppy phase, marked by uncertainty and reaccumulation after the Bitcoin halving. The altcoin market reflects the price movements seen in 2020-2021, although the timing is different, which could be attributed to the growth and innovation of the cryptocurrency sector.

The delay in the altcoin rally is linked to BTC price fluctuations. This implies that the altcoin season could be delayed until “digital gold” stabilizes in price or hits new highs, as claimed CrediBULL Crypto.

4. Market manipulation and whales

Cryptocurrency markets can be manipulated by influential holders, also known as whales, who have a significant impact on price movements. Whales have the ability to influence the market by coordinating their buying or selling, resulting in manufactured fluctuations and slowing the altcoin price surge. Additionally, the existence of pump and dump schemes and insider trading intensifies market manipulation, hindering the natural development of altcoins.

Whales have a significant influence on altcoin prices through their selling pressure, which impacts market sentiment and liquidity. Heavy whale sales can delay expected recoveries by causing sudden price declines and creating uncertainty. Conversely, strategic purchases by whales can temporarily drive prices up, only to fall again when they sell out. Whales can also spread fear or greed through the media, affecting traders’ decisions and causing erratic market behavior that delays potential rebounds.

For example, an unknown wallet transferred almost 25 million XRP tokens worth $14.75 million at cryptocurrency exchange Bitstamp on April 8, 2024. This large transfer sparked speculation within the crypto community and was attributed to the subsequent drop in XRP prices.

Conclusion

Although altcoins present promising diversification and investment opportunities, their rebounds can be influenced by different factors leading to possible delays and fluctuations. For investors to successfully navigate the volatile cryptocurrency landscape, it is essential that they understand the fundamental factors driving the altcoin rally, such as market sentiment, regulatory uncertainty, technological advancements and the external dynamics of the market. By staying informed and conducting proper research, investors can improve their chances of taking advantage of the potential opportunities offered by altcoins while reducing the risks associated with delayed rebounds.

Fuente