- The 2023 double bottom follows historical patterns from 2015 and 2019, hinting at a potential altcoin surge soon.
- Historical breakouts from double-bottom formations have led to massive altcoin rallies, reinforcing the current market’s bullish potential.
- The 2023 setup suggests a period of accumulation before a breakout, as diminishing returns show the market’s evolution.
Merlijn The trader pointed out the recurring cycle in the overall crypto market cap excluding Bitcoin, with double-bottom patterns having most frequently given way to major rallies by altcoins. The cyclical movement has occurred on several occasions in history and could foretell the same in the near term.
History of Double Bottoms and Altcoin Rallies
The analyst notes that major double-bottom patterns were experienced in 2015, 2019, and 2023, all signaling significant rallies for altcoins. In 2015, following the double bottom setup, altcoins experienced an immense 996x surge into the 2017 bull market. The same structure repeated itself in 2019 and resulted in a 150x rally into the 2021 top of the market.
Merlijn points out that these breakouts above falling resistance lines with green circles are critical signals of an uptrend. These breakouts were accompanied by parabolic uptrends, illustrated by red shaded boxes on the chart. This predictable pattern is an important feature of past cycles.
Diminishing Returns with the Growth of the Market
One of the key observations is the decreasing magnitude of each rally over time. It indicates that although the market still demonstrates an overarching pattern of exponential growth, the returns of each cycle are diminishing. The diminishing returns could be an indication of the matured nature of the market and the possibility of more judicious growth.
In spite of this trend, the current structure of the double bottom witnessed in 2023 could potentially be an indication of the start of the next altcoin surge. Investors and traders can interpret this to be an accumulation period leading to an imminent breakthrough. Nevertheless, one should consider that the performance in the future may be driven by macroeconomic conditions, regulatory actions, and the dominance by Bitcoin.
Merlijn is of the view that the 2023 double bottom could give rise to the subsequent altcoin rally, although the extent of this boost is not clear-cut. The cyclical behavior and psychology of the market still inform traders’ actions and make this a season of strategic positioning in preparation for probable gains.
