The cryptocurrency market capitalization has recently been declining, down 2.06% to $3.33 trillion. However, broader analysis shows a more significant drop, from $3.7 trillion in November to $3.28 trillion on December 24, a decline of 18.33%.
In the past 24 hours, while the market declined, trading volume increased by 3.3%, reaching $121.84 billion. This indicates that the selling pressure from traders is supported by actual momentum.
This downward market trend typically affects the performance of altcoins, especially since these tokens often follow the broader market trends. In fact, according to analysis from AMBCrypto, the decline in capital inflows has played a key role in the ongoing market downturn.
The net position change indicator for total market realized value shows that capital inflows measured in dollars have decreased from $134 billion on December 10 to $100 billion at the time of writing.
Such a decline typically indicates a lack of bullish sentiment towards most cryptocurrencies in the market. Instead, investors seem more inclined to hold stable assets rather than purchase volatile tokens. This will reinforce bearish market sentiment and increase the likelihood of a sustained decline.
Despite an overall decline in capital inflows, it is anticipated that some tokens will still maintain bullish momentum and potentially outperform the broader market.
BNB is expected to set a new all-time high
BNB remains one of the best-performing cryptocurrency assets in 2024, having set two historical highs this year.
After peaking at $691.77 in 2021, BNB broke this level in June 2024, reaching $721.80 on the leaderboard. By December 2024, it set another record with a trading price of $793.86.
AAVE still maintains a structurally bullish outlook
On the price chart, AAVE has consistently remained in the bullish zone. After several months of market consolidation, this asset surged in January, rising 332.78% to $399.85—its lowest level since 2021.
On December 17, AAVE's total locked value (TVL) reached an all-time high of $23.19 billion. However, its TVL has since slightly retreated to $20.63 billion. This modest decline suggests that AAVE's fundamentals remain bullish, especially in light of the continued growth of activity on its protocol.
Key requirements for altcoin season
A major condition for the realization of altcoin gains is the decline in Bitcoin's dominance, which is used to compare Bitcoin's performance with that of other altcoins in the market. When Bitcoin's dominance is high, it indicates that Bitcoin is outperforming most altcoins. Conversely, a lower dominance suggests stronger performance from altcoins.
CoinMarketCap reports that Bitcoin's dominance has slightly decreased by 0.18%, falling to 56.94%.
Given Bitcoin's dominant position remains relatively high, the peak season for altcoins may be delayed. It will likely take at least a more significant drop, potentially below the 50% mark.