Altseason Narrative Strengthens as Altcoin Market Cap Breaches Multi-Year Resistance Level
The total altcoin market capitalization has crossed $140 billion, possibly signaling the beginning of a new altseason.
Altcoin Market Cap Breaks Resistance
According to a tweet by cryptocurrency analyst Rekt Capital on Tuesday (August 11, 2020), the altcoin market has crossed a major resistance level, going above $140 billion for the first time in two years. This break above a multi-year resistance level after consistently maintaining support could mean the start of a sustained altseason period.
Despite the rise, the altcoin market cap is still more than 70% away from its January 2018 all-time high of about $540 billion. Altcoin token prices took massive hits during the 2018 bear market with many “coins” losing up to 90% in value.
Most of these tokens have so far failed to engineer any sustained price recovery leaving early investors still in the red. If the altcoin market capitalization breaks above the upper resistance channel at 4180 billion, it could be the trigger for a parabolic advance in altcoin token valuation.
The last time the altcoin market cap rose above $180 billion, the crypto market was in the middle of a major bullish advance back in 2017. Many existing tokens at the time set record prices as the initial coin offering (ICO) hype drove retail investors in search of quick gains.
DeFi and Staking Setting the Pace of 2020 Altseason
Decentralized finance (DeFi) has been the major narrative in the crypto market in 2020. Although its centralized counterpart has dominated the crypto scene for a long time, recent activities in the decentralized space show DeFi’s gradual hold of the sector in a short time.
As reported by BTCManager this August, the DeFi market cap crossed $8 billion. The current market cap stands at over $11 billion according to data from CoinGecko, with Chainlink occupying the top spot at almost $5 billion.
Different factors such as the yield farming craze contributed to the surge in the DeFi sector. However, some analysts warn that the yield farming mania could jeopardize the growing DeFi market. Other projects like Compound and Balancer that offer users the opportunity to supply liquidity to the protocol in exchange for high rewards also contributed to DeFi’s growth.
Apart from DeFi, the move by several major altcoins like Ethereum and Cardano to proof-of-stake (PoS) is raising expectations for staking rewards. The anticipated ETH 2.0 update will see Ethereum move from the proof-of-work (PoW) consensus algorithm to PoS. Recently, the Ethereum Foundation set up a security team ahead of the Ethereum staking upgrade.
Also, Cardano’s project developer IOHK partnered with Coinbase Custody back in July. The collaboration will see ADA holders store and stake their tokens on the Coinbase Custody cold storage, offering security to ADA holders.