The significant decline in capital flow into the cryptocurrency market has contributed to the delay of the altcoin season.
Tokens like BNB and AAVE are predicted to maintain a bullish outlook despite the challenging situation.
The total market capitalization of major cryptocurrencies has recently declined sharply, down 2.06% to $3.33 trillion. However, deeper analysis shows a stronger decline of over 18.33% – From $3.7 trillion in November to $3.28 trillion on December 24.
In the past 24 hours, the market decline occurred alongside a 3.3% increase in trading volume, reaching $121.84 billion. This indicates that the selling pressure from traders is reinforced by actual momentum.
Such declining market trends often impact the performance of altcoins, especially when these Tokens tend to follow the general market trend. In fact, according to analysis by TinTucBitcoin, the decline in capital flow has played a crucial role in the current market downturn.
The liquidity flow has seen a significant decline.
According to data from Glassnode, there has been a notable decline in capital flow into the cryptocurrency market – A sign indicating a lack of active investment.
Data from the Real Value Index of the Aggregate Market revealed that capital flow, measured in USD, has decreased from $134 billion on December 10 to $100 billion at the time of writing.
Source: X
Such a decline is often a sign that the market lacks bullish confidence regarding most cryptocurrencies. Instead, investors seem to prefer holding more stable assets rather than buying highly volatile Tokens. This would reinforce the negative trend of the market and increase the likelihood of prolonged downturns.
Despite an overall decline in capital flow, some Tokens may still maintain upward momentum and the potential to outperform the broader market.
BNB is preparing to set a new all-time high.
BNB remains one of the best-performing cryptocurrency assets in 2024, achieving two all-time highs this year.
After the previous peak of $691.77 in 2021, BNB surpassed this level in June 2024, reaching $721.80. By December 2024, it set another record, trading at $793.86.
Source: Trading View
At the time of writing, BNB appears to be in an accumulation phase, as shown by its chart pattern. If the Token breaks out of this phase, it could trigger another price surge, with strong potential to surpass previous highs and aim for levels above $800.
AAVE continues to maintain a bullish structure.
On the price chart, AAVE continues to hold its position in the bullish zone. After several months of market accumulation, this asset exploded in January, rising 332.78% to reach $399.85 – The last price seen in 2021.
AAVE reached a new all-time high for its Total Value Locked (TVL) on December 17, peaking at $23.19 billion. However, its TVL has since experienced a slight decline to $20.63 billion. This slight decline indicates that AAVE remains fundamentally bullish, especially as activity on its protocol continues to grow.
Source: DeFiLlama
If the TVL remains stable or increases, the price of AAVE is likely to prolong its upward trend. Especially since it plays a crucial role in driving platform activity.
Key requirements for the altcoin season.
An important condition for an altseason to occur is a decline in Bitcoin Dominance, a metric that compares the performance of Bitcoin to other altcoins in the market. When Bitcoin Dominance is high, it indicates that Bitcoin is outperforming most altcoins. Conversely, lower dominance suggests that altcoins are performing stronger.
At the time of writing, CoinMarketCap reports that Bitcoin Dominance has slightly decreased by 0.18%, down to 56.94%.
With Bitcoin Dominance still relatively high, the altcoin season may be delayed. At least until a stronger decline occurs, which could bring it below the 50% level.