CoinMarketCap data indicates a decline in the Altcoin Season Index to 21 points after being at 55 points last July. This decline comes amid weak performance of most altcoins compared to Bitcoin (BTC) during the current cryptocurrency market correction, delaying the hopes of speculators for quick returns.
Reasons for Bitcoin BTC's dominance and the disappointing performance of alternative coins
According to crypto.news, the main reason for the weak altcoin season index is Bitcoin #BTC entering a correction phase after it fell more than 10% from its highest level this year of $126,200 to around $89,000 currently.
Historically, altcoins tend to thrive when Bitcoin #BTC is in a strong upward trend, and as a result, Bitcoin's dominance index has risen from a low of 37% in January to 58% today, while Ethereum's dominance has decreased to 11%.
Among the biggest losers in the altcoin market over the past three months are currencies like #Double Zero, #Story , #Celestia , #Ethena , #Pudgy Penguins, #Cronos , Aptos, and Arbitrum, all of which have lost more than 60% of their value.
Fear dominates the cryptocurrency market and investors are reducing leverage
According to the site, a clear feeling of fear dominates the cryptocurrency market, especially after the major liquidation event on October 10, which wiped out more than $20 billion in market value. Since then, investors have moved to a phase of risk reduction and deleveraging, as open futures interest has dropped from $225 billion in October to $122 billion currently. The funding rate for most currencies has stabilized, while the fear and greed index remains at 21 points in the fear zone.
This expresses general caution, reinforced by warnings from figures like Kevin O'Leary that most altcoins "are worth nothing" and that only Bitcoin BTC and Ethereum ETH will survive in the long term.
Factors that could bring life back to the altcoin market
The site confirmed that despite the bleak outlook, there are some positive factors that could revive the market. Strong altcoin rally seasons often begin when the season index itself is in a deep negative area (red) and when the fear and greed index is in the fear zone, which is what the current conditions achieve.
Additionally, the market may get a boost from the anticipated decision by the U.S. Federal Reserve to cut interest rates, which many officials expect, and there is also the possibility of what is known as the "Santa Claus Rally" that typically boosts stock and cryptocurrency markets towards the end of the year. Careful monitoring of these factors remains key to understanding the potential timing of a market shift.
