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Real Vision analyst Jamie Coutts on Thursday presented an optimistic outlook for high-quality altcoins, highlighting that the current setup appears increasingly favorable as global liquidity gears up for expansion.
What Happened: In a post on X, Coutts noted that the top 200 equal weight versus market cap weight ratio has hit extreme bearish levels, currently sitting at -2.8 standard deviations.
This bearish extreme has only been reached on three prior occasions, each marking significant moments in the crypto market’s cycle.
“In 2021, during a bull market, it proved to be an excellent re-up for the cycle. In 2022, it hit prematurely but close to the cycle lows when the market was down 70%. In 2023, it was near the SEC-catalyzed capitulation lows, with alts decisively breaking higher four months later,” Coutts observed.
Despite the small sample size, Coutts suggests that this breadth measure hints at upcoming cyclical bottoms and mid-cycle entries.
He emphasizes that the current data parallels 2021’s mid-cycle slump rather than the end-of-cycle scenarios seen in 2022 and 2023.
“While momentum still sucks, the ratio tells us that things are close to washed-out at a time when global liquidity is about to turn higher. The risk/reward setup looks increasingly favorable for high-quality alts,” Coutts stated.
Also Read: VanEck Files Solana ETF Application, SOL Rallies 6%
Reflecting on earlier predictions, Coutts reiterates his belief in a market turnaround in the second half of the year. “I still believe a turnaround will happen in the second half of the year – sooner rather than later, as liquidity at the margins is starting to improve (recent central bank cuts),” he said.
Coutts also pointed to signals for the upcoming “altseason,” noting that while short-term alt price action remains bearish, there are indicators of change on the horizon.
“A moving average bullish cross on the top chart and a reversal on the altseason index sub-chart would be a pretty clear signal that things have changed,” he explained.
This analysis comes at a critical time for investors and market participants, offering insights into the potential for altcoins such as Ethereum (CRYPTO: ETH) and Solana (CRYPTO: SOL) to rebound as global financial conditions shift.
As central banks make cuts and liquidity improves, the setup for high-quality altcoins could present lucrative opportunities.
What’s Next: For more in-depth discussions and insights into the future of digital assets, industry stakeholders can look forward to Benzinga’s Future of Digital Assets event on Nov. 19, where experts will delve into such pivotal topics.
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