Altcoin Market Cap Tests Key Structure as Bullish Divergence Emerges

The broader altcoin market may be approaching a technical inflection point as momentum indicators begin to shift while the larger trend remains under pressure.

Recent chart observations suggest the market is attempting a recovery phase after a sharp correction, but confirmation of a trend reversal has yet to occur.

According to analysis shared by Michaël van de Poppe, the total cryptocurrency market capitalization excluding Bitcoin continues to trend downward on the higher timeframe. Until that structure changes, the prevailing trend remains bearish.

However, several technical signals are beginning to appear that could point toward a short-term recovery or mean-reversion move before the next major directional decision.

Short-Term Price Action: Market Attempts Recovery

The chart shows the total crypto market capitalization currently sitting around $2.38 trillion, following a steep decline from the recent highs near $4 trillion.

After that drop, the market has begun forming a small recovery structure as price attempts to push higher from the recent local bottom.

A highlighted move on the chart suggests a potential rebound of roughly 29%, which would place the next upside test close to $3.1 trillion. That area aligns closely with the 21-week moving average, a level that has historically acted as a key trend indicator during previous market cycles.

As long as the market remains below that moving average, the broader trend structure remains technically downward.

Higher-Timeframe Signals: Gap to the 21-Week MA

One of the key observations from the chart is the large gap between the current market cap and the 21-week moving average.

Similar gaps appeared during previous corrections, including the Q4 2025 pullback and the deeper drawdowns during 2022. In both cases, the market eventually produced a recovery rally that moved back toward the moving average before determining the next trend direction.

This type of move is often described as a mean-reversion reaction, where price returns toward a key trend indicator after a sharp deviation.

Momentum Indicator Shows Early Divergence

Another notable signal visible on the chart appears in the MACD indicator, where momentum is beginning to diverge from price.

While the market recently printed lower lows, the MACD is forming higher lows, creating a bullish divergence. This pattern can sometimes mark the early stages of a bottoming process.

However, such signals can take time to fully develop. Similar divergence patterns appeared during the 2022 correction, where the market initially bounced before eventually making another lower low.

Scenarios to Watch

Bullish mean-reversion scenario

If the market continues to build higher lows from the current base, the most immediate target would likely be a move toward the 21-week moving average near $3.1 trillion.

Such a move would represent roughly a 25–30% recovery from the recent lows, aligning with the rebound projection shown on the chart.

Bearish continuation scenario

If the market fails to reclaim the moving average and momentum fades, the broader downtrend could remain intact.

In that case, the market may eventually return to test the recent lows again before a clearer long-term bottom forms.

Market Structure Still Needs Confirmation

For now, the altcoin market sits between two competing signals. The higher timeframe still reflects a downward trend, but momentum indicators are beginning to show signs of exhaustion after the recent decline.

As Michaël van de Poppe notes, this combination often leads to a short-term recovery toward key trend levels, followed by a market decision depending on whether buyers can reclaim those levels.

Until the 21-week moving average is decisively reclaimed, the current rebound remains a potential mean-reversion move rather than confirmation of a full trend reversal.

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