Small- and Mid-Cap Altcoins Flash First Bullish Signal in Six Years—A 2020 Deja Vu?

▲ Altcoins, Cryptocurrency ETF/AI-Generated Image

Mid- and small-cap altcoins outside the top 10 by market capitalization are showing signs of a rapid shift in capital flows, generating a historic trend reversal signal against Bitcoin for the first time in six years.

Crypto analyst Dan Gambardello stated in a video uploaded to his YouTube channel on February 21 (local time) that he has identified a decisive change in the OTHERS/BTC chart, which tracks the performance of mid- and small-cap altcoins, as its MACD indicator crossed above the signal line. Gambardello explained that the index measuring the value of assets excluding Bitcoin (BTC) and other top market-cap coins has sent a strong technical reversal signal for the first time in about six years. He added that technical patterns seen just before the major surges in 2017 and 2020 are now being replicated.

News that the U.S. Supreme Court ruled 6–3 that former President Donald Trump’s tariffs were unconstitutional caused temporary market confusion, but it is unlikely to derail the upward trajectory of digital assets. Gambardello projected that the ruling could instead act as a catalyst for additional economic stimulus and liquidity injection from the administration. The liquidity supplied as policy friction is resolved could provide a strong foundation for buying pressure in the mid- and small-cap altcoin market.

The acceleration of legislation for the U.S. cryptocurrency market structure bill (CLARITY Act) being pushed by the administration is also seen as a key driver for the revaluation of smaller assets. Ripple’s chief legal officer confirmed that drafting of the bill is underway, while Ripple CEO Brad Garlinghouse predicted a 90% chance of passage by April, heightening market expectations. If enacted, the legislation would establish a legal pathway for trillions of dollars in institutional capital to enter the market, potentially leading to a spillover effect into assets beyond BTC.

The Purchasing Managers’ Index (PMI), a key macroeconomic indicator, entering expansion territory for the first time since 2020 further strengthens confidence in the bullish outlook when combined with the technical signals. The simultaneous occurrence of economic expansion and regulatory clarity is being viewed as a classic precursor to a historic bull market. Gambardello emphasized that the signal on the OTHERS/BTC chart could mark the end of six years of stagnation and the beginning of a period of outperformance.

The digital asset market has entered a new liquidity cycle alongside the end of quantitative tightening, while mid- and small-cap altcoins are benefiting simultaneously from technological advancements and institutional integration. As the market structure centered on BTC reaches an inflection point and broadens toward smaller assets, investors are advised to closely monitor shifts in macro capital flows.

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