Solana drops 22%, Dogecoin 28% as traders bet weekend wipeout will spark altcoin rally

Could another altcoin season be brewing? Crypto analysts believe so pointing to historical market patterns where major corrections preceded massive altcoin rallies. The recent weekend wipeout, which erased billions in leverage positions might have just set the stage for altcoin season 3.0.

Crypto analysts have identified consistent historical patterns showing that major market dumps often come right before powerful altcoin season rallies. Many now speculate that the massive weekend leverage flushout could be the reset needed to ignite another altcoin season across the crypto market.

“Every major expansion in crypto has featured sharp corrections of 30% to 60% along the way,” observed analyst and researcher Bull Theory on Monday.

In March 2020, nearly 70% of market value was wiped out during the pandemic induced crash while May 2021 saw a similar 50% correction. There were at least five other 30% to 40% altcoin slumps during the previous bull cycle each one eventually leading to a strong altcoin season rebound.

The crash of the market in April had many speculating that a new bear market had begun. However,

“each of those wipeouts looked like the end yet every one was followed by the strongest rallies of the cycle,”

the analyst noted, reinforcing optimism that another altcoin season could be on the horizon.

Altcoins Will Bounce Back

Altcoins are usually hit hardest during these epic market resets and that pattern held true this weekend. XRP dumped 18%, Solana 22%, Dogecoin 28%, Cardano 25%, and Chainlink 26% in a single day.

After the March 2020 flash crash,

“We previously witnessed a massive altseason where altcoins surged between 25x and 100x,” said analyst Ash Crypto, adding that “I think it will happen again.”

This sentiment feeds into the broader expectation that a new altcoin season could be forming in the weeks ahead.

Meanwhile, analyst Merlijn The Trader highlighted a potential setup for “Altcoin Season 3.0,” noting a bullish monthly MACD crossover on the BTC/altcoins chart the same technical signal that has historically preceded past altcoin rallies.

Total Crypto Cap Falls Below $4 Trillion

Despite growing optimism about an upcoming altcoin season, the total crypto market capitalization fell below the $4 trillion mark on Tuesday. Bitcoin led losses with a 1.4% decline dropping below $113,500. Interestingly, some altcoins were already posting daily gains hinting at a possible rotation of strength that often signals the beginning of an altcoin season.

Additionally, Bitcoin dominance a crucial measure of altcoin performance recorded its first red weekly candle in five weeks slipping below 59% according to TradingView. Historically, a drop in Bitcoin dominance has preceded the onset of an altcoin season where capital flows from Bitcoin into smaller cap cryptocurrencies.