Has the altcoin season ended? Will it repeat the trend of March? (This article was published on the 12th on X, I forgot to sync with the Square, my apologies)
In the early hours of December 10th, the cryptocurrency market saw a sharp short-term drop in altcoins and meme coins, leading to significant losses and nearly 600,000 liquidations, far exceeding the 100,000 liquidations during the '3.12 Crash' of 2020. Meanwhile, funding rates plummeted and approached bear market levels. This indicates that the rapid rise of altcoins was driven by leveraged funds, which were expected to last about a month; however, overnight liquidations cleared the leverage, causing altcoins to temporarily lose upward momentum.
Currently, altcoins face ongoing unlocks from venture capital firms, stagnation in ecosystems, and unresolved fundamentals due to large market capitalizations. This rebound driven by leveraged funds came quickly and left just as fast.
On the other hand, BTC and ETH, supported by US ETFs, are faring slightly better, with ETF funds continuing to net buy Bitcoin and Ethereum, resulting in smaller declines for Bitcoin. Bitcoin ETFs have seen net inflows for 9 consecutive days, totaling $4 billion (of which 88% comes from BlackRock); Ethereum ETFs have had net inflows for 12 consecutive days, totaling $1.9 billion (of which 64% comes from BlackRock).
Will we see a repeat of the March trend? Will BTC experience wide-ranging fluctuations while altcoins enter a downward trend?
It is highly likely. For BTC, due to large institutions, substantial capital, and even national governments considering it as a strategic reserve, it is difficult to see a significant drop unless a black swan event occurs in the US macroeconomy. However, altcoins, especially ancient altcoins, lack ecosystem and technological breakthrough potential, resulting in a low wealth effect for ordinary investors. Therefore, it is highly probable that Bitcoin will fluctuate in the $80,000 to $110,000 range driven by funds like ETFs and MSTR until the next driving event occurs. After the liquidation of leveraged funds in this round, if no new ecosystems emerge, altcoins are likely to show a rebound followed by continued declines.
In terms of strategy, after each major market drop, consider bottom-fishing, and once there is a 30%-50% rebound, it may be time to take profits, avoiding excessive greed. Focus on leading projects in #defi, #meme, #ai, and #rwa tracks!
