Original author: Nancy Lubale, CoinTelegraph

Original compilation: Web3 Scent Observation

Editor's note: Altcoins generally refer to cryptocurrencies that serve as alternatives to Bitcoin; in other words, any cryptocurrency other than Bitcoin (BTC) can be called an altcoin. Recently, altcoin prices have been in a slump.

Cryptocurrency analysts believe that the altcoin market is nearing a "momentum bottom" by comprehensively analyzing indicators such as the top 200 equal-weighted cryptocurrency index, daily active users (DAU) on-chain, and Bitcoin's market dominance. Historical data suggests that the altcoin season may arrive soon.

Over the past two weeks, the altcoin market has been in a downward trend, but a key indicator shows that the recent pullback may indicate a "relative momentum bottom." If history repeats itself, cryptocurrency analysts believe that a "concentrated rise" may occur soon.

Jamie Coutts, Chief Cryptocurrency Analyst at Real Vision, stated that the top 200 equal-weighted cryptocurrency index "is still in a downward trend, but the altcoin season indicator shows that the recent drop of 10% is likely a relative momentum bottom."

The top 200 equal-weighted cryptocurrency index is an equal-weighted index designed to track the performance of the top 200 cryptocurrencies by market capitalization relative to Bitcoin.

Coutts shared the following chart, showing that the index has been declining while the altcoin season indicator has dropped to a low of 10%. This means that "only 10% of the top 200 cryptocurrencies have outperformed Bitcoin in the past 90 days," the analyst explained.

Historically, this often marks a market bottom, followed by a sustained rise in altcoins.

Equal-weighted cryptocurrency index vs. daily active users vs. altcoin season indicator, source: Jamie Coutts

"Altcoins may oscillate at these levels for a while longer, and then we will see a concentrated rise, with many already starting to build a solid foundation."

Coutts also considered another indicator reflecting the entire cryptocurrency market—the daily active users (DAU) count—to support his prediction for the altcoin market trend.

DAU is an indicator that reflects the number of unique public addresses conducting transactions on the blockchain each day.

Coutts pointed out that the DAU count across all blockchains has grown by 97% year-to-date, indicating that "growth remains strong."

He stated that more users mean more user fees, which translates to "asset prices rising."

Renowned cryptocurrency analyst Moustache stated in a post on July 15, "I believe some altcoins are ready for a second wave of increases." He also added that the highly anticipated launch of the Ethereum spot ETF could provide the necessary boost.

In a previous article, Moustache shared the following chart, showing that the market capitalization of altcoins is repeating a trend similar to 2020 before starting "the strongest wave of the bull market."

Source: Moustache

It is still Bitcoin season

The Bitcoin dominance chart (which measures Bitcoin's market share relative to the entire cryptocurrency market) is one of the commonly used indicators to signal the start of altcoin season. It can provide traders with insights into overall market investor sentiment and risk appetite.

This indicator has been on an upward trend since the beginning of 2024, reaching a three-year high of 56.5% on April 13. As of the time of writing, Bitcoin's dominance is at 54%, indicating that it is still Bitcoin season. This means that altcoins are still underperforming compared to Bitcoin.

Bitcoin market dominance, source: TradingView

According to Blockchain Center data, only 37% of the top 50 altcoins have outperformed Bitcoin in the past three months. While this is a positive sign, it is still insufficient to declare the arrival of altcoin season. For altcoin season to be declared, this percentage must exceed 75%.

Altcoin season index, source: Blockchain Center

This means that although signs of altcoin season are beginning to emerge, it is still too early to draw conclusions.