- The altcoin market lost $234 billion in two weeks as Bitcoin dominance nears 60%, delaying expected market shifts.
- Investor caution remains high with the Crypto Fear and Greed Index at 39, further limiting recovery in the altcoin market.
The altcoin market is once again experiencing significant pressure. Its market capitalization dropped shockingly by $234 billion over the past two weeks, according to GlassNode. This number represents not only a normal adjustment but also one of the largest altcoin historical declines. Previously hoping that the market cycle would provide a breath of fresh air, investors now live in a far more complex reality.
The issue is that many believed, following Bitcoin’s rise, capital would migrate to altcoins as it did in past cycles. But the plot is different this time. Most altcoins dropped rather than grew. Indeed, what happened?
Bitcoin Still Controls the Market
Rising dominance of Bitcoin is one of the main reasons the altcoin market are falling. About 60% of the whole crypto market cap is under control right now by Bitcoin. Historically, altseasons—where altcoins see fast rises—can only happen when the dominance of Bitcoin declines below 50%. Still, the likelihood of altcoins shining once more seems remote as Bitcoin keeps getting stronger.
On the other hand, a prior CNF report revealed that the Altcoin Season Index is at 43, thus altcoins are still finding it difficult to outperform Bitcoin over the past 90-days. This suggests that rather than migrate to riskier assets, investors would rather keep with Bitcoin.
Investors Are Increasingly Cautious
The Crypto Fear and Greed Index, at 37, clearly shows market uncertainty as well. This number reveals that investors still often exercise caution while making decisions. Longer-than-expected movement of altcoins may be hampered by market mood that often leans fearful.
Moreover, on-chain data reveals that Bitcoin reserves on exchanges keep dropping. The lowest figure in recent years, the total Bitcoin accessible on exchanges right now is just about 2.4 million BTC.
More and more Bitcoin holders are thus choosing to keep their assets in personal wallets instead of selling them on the market. Should this trend keep, altcoin liquidity might also drop even more.
Can Altcoin Market Rise Again?
Imagine, then, if in this context a fresh invention from an altcoin project suddenly attracted market attention. History has shown that there are always initiatives that survive and even grow stronger in trying circumstances. Still, for now the state of the market is not favorable for a significant altcoin surge.
An altseason could develop if Bitcoin begins to lose its dominance and investors start acting once more at risk. But given the state of affairs, altcoin investors have to be more discriminating in selecting initiatives with solid foundations that go beyond mere trend following.
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