The crypto market capitalization has recently decreased, dropping slightly by 1% to $3.33 trillion. However, broader analysis indicates a drop of up to 18.33%, from $3.7 trillion in November to $3.28 trillion on December 24.
In the past 24 hours, the market decline occurred simultaneously with a 3.3% increase in trading volume, reaching $121.84 billion. This indicates selling pressure from traders driven by the actual situation.
Such downward trends in the market often have a strong impact on the performance of altcoins, especially as these tokens tend to move in line with the broader market trend. In fact, analysis shows that the declining capital inflow plays a key role in the ongoing weak state of the market.
Liquidity inflows have decreased significantly
According to Glassnode, the capital inflow into the crypto market has significantly decreased. This is a sign of a lack of active investing.
Data from the Aggregate Market Realized Value Net Position Change (net position change of fair value in the market) shows that capital inflow decreased from $134 billion on December 10 to $100 billion at the time of writing.
Source: Ali
Such a downturn is often a sign of a market lacking bullish sentiment for most cryptocurrencies. Instead, investors tend to prioritize holding more stable assets over buying volatile tokens. This will reinforce the bearish sentiment in the market while increasing the risk of continued decline.
Although the capital inflow is generally lower, some tokens are expected to maintain strong growth momentum and have the potential to outperform the broader market.
BNB is set to establish a new record high
Binance Coin (BNB) remains one of the best-performing cryptocurrencies in 2024, achieving two all-time highs this year.
After the previous peak of $691.77 in 2021, the price of BNB surpassed this level in June 2024, reaching $721.8 on the chart. 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. If it surpasses this phase, BNB could generate another bullish run, with the potential to reclaim previous highs and target above $800.
AAVE continues to maintain a bullish trend
On the price chart, AAVE continues to hold its position in the bullish zone. After several months of market stabilization, this asset made a strong breakout in January, rising 332.78% to $399.85 – a level last seen in 2021.
AAVE reached a new all-time high for Total Value Locked (TVL) on December 17, peaking at $23.19 billion. However, TVL has slightly decreased to $20.63 billion thereafter. Nevertheless, AAVE remains fundamentally optimistic, especially as activity on its protocol continues to rise.
Source: DeFiLlama
If TVL remains stable or continues to grow, the price of AAVE is likely to continue rising. Especially since it plays a central role in driving the platform's activity.
Important requirement for the altcoin season
An important condition for the altcoin season to materialize is a decline in Bitcoin's dominance rate (BTC.D), a metric that compares Bitcoin's performance with other altcoins in the market. When BTC.D is high, it indicates that Bitcoin is performing better than most altcoins. Conversely, a lower dominance rate suggests that altcoins are seeing stronger performance.
At the time of writing, BTC.D is currently at 58.8%.
As BTC.D remains relatively high, the altcoin season may be delayed. At least until the market declines significantly more, potentially bringing this index below the 50% mark.
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