- Positioning for altcoins? These bearish signals call for caution.
- The altcoin season index slipped below 50%, marking a new monthly low.
As a seasoned researcher with over two decades of experience in the crypto markets, I must admit that the current situation presents a challenging landscape for altcoins investors. The bearish signals are indeed concerning, and the recent drop in the Altcoin Season Index to 50% marks a new monthly low, which is a clear indication of a market downturn.
After the recent drop in the cryptocurrency market, which followed Bitcoin‘s [BTC] adjustment, many alternative coins (altcoins) are currently on sale at significantly reduced prices.
Some analysts are advocating for seizing the discounted prices due to ‘buying the dip.’ However, altcoin trader and Alphractal’s founder, Joao Wedson, has issued a cautionary note. In his words, he is advising altcoin traders to exercise caution.
“The best strategy is to stay in Stablecoins, not BTC or any Altcoins. The recent performance and dominance trends aren’t favorable. The ideal exit was when BTC was above $106k —time to exit everything!”
Wedson cited an uptick in Bitcoin vs altcoin positioning which meant more capital flowed from altcoins to BTC and stablecoins.
Is it time to buy altcoins?
As per Wedson’s analysis, Bitcoin’s dominance reaching a point above 54% may solidify over the coming weeks and months, potentially posing difficulties for alternative cryptocurrencies, which he describes as a challenging period for altcoins.
He added that the altcoin scenario was even worsened by the BTC dominance 90-day change turning positive for the first since the wild altcoin rally in November.
Essentially, it appears that the altcoin market may not bounce back quickly following the recent downturn. Over the last seven days, many leading and mid-level altcoins have experienced a drop of between 10% and 30%.
Over a specific timeframe, Ripple (XRP) and Cardano (ADA) experienced significant drops among leading altcoins. XRP fell approximately 10%, although it managed to stay above the $2 mark. In comparison, ADA plummeted by 18% and dipped below the $1 threshold during the same timeframe.
Remarkably, while many other cryptocurrencies experienced a significant drop, Ethereum [ETH] managed to withstand it more effectively. Its decline was limited to just 6%, and it successfully held the $3.5K level as a point of support.
However, other outliers like Hyperliquid [HYPE] and Pudgy Penguins [PENGU] rallied 40% and 425%.
Speaking of which, the general altcoin market showed a significant slowdown as the Altcoin Season Index fell to its lowest point in a month at 50%.
It’s uncertain if the anticipated ‘Santa rally’ will improve altcoins’ outlook, given the current trend points towards bears. However, should there be a significant recovery in 2025, it could reignite interest in the altcoin market.
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2024-12-22 14:15