Yesterday, the altcoin market saw a significant pullback, especially for major tokens such as Ethereum (ETH), Solana (SOL), XRP, and Dogecoin (DOGE), with futures liquidations reaching as high as $1.5 billion at the beginning of the week. While expectations for altcoin season continue to heat up in the market, this pullback is a clear indication that Bitcoin (BTC) remains firmly in market dominance despite speculation that altcoin season is imminent.
On Monday, major altcoins such as ETH, SOL, XRP, BNB and DOGE generally fell by more than 4%, indicating that the confidence of bulls began to waver. Previously, the total market value of the altcoin market had exceeded the $1.6 trillion mark for the first time since 2021. However, with Bitcoin breaking through the key psychological price of $100,000, the market's expectations for the altcoin season may have calmed down, which may be an important reason for the altcoin pullback.
According to Coinglass, while BTC’s price fell by only 3.2% and the liquidation amount was about $185 million, the altcoin market suffered a more severe sell-off, with total futures liquidations exceeding $1.5 billion. Most of the long positions that had expected altcoins to continue to rise were liquidated, and the liquidation amount of altcoin long positions hit a two-year high of $1.4 billion. This large-scale liquidation phenomenon not only exacerbated the downward pressure on the market, but also may cause panic among investors, prompting them to transfer funds to stablecoins or Bitcoin.
However, despite the pullback in altcoins, the increase in stablecoin liquidity in the market does not indicate a capital rotation process from Bitcoin to altcoins. On the contrary, the data shows that the overall rally was driven by new capital inflows into the market, rather than the outflow of Bitcoin capital. This means that although the pullback in altcoins has caused some panic, the fundamentals of the market remain strong.
Cryptocurrency investors and analysts generally believe that this pullback may just be a short-term adjustment of the market, accumulating momentum for the next round of gains. Looking back at previous altcoin seasons, it can also be found that similar pullbacks have had a positive impact on altcoins. For example, in the 2021 bull cycle, altcoins experienced a sharp drop after hitting a new high in May, but then hit a new high again in November. Therefore, the current correction may be seen as a buying opportunity, especially when tokens like Solana (SOL) and Ton (TON) are still trading below their all-time highs.
Further analyzing the data from CryptoQuant, based on the performance of BNB and Bitcoin over the past week, both SOL and TON assets may break through their previous historical highs in the future.
However, the current pullback in the altcoin market also reflects the close correlation between altcoins and Bitcoin. The recent decline, especially after Bitcoin price fell below $100,000, has affected the performance of altcoins. If this correlation persists, the probability of a full-blown altcoin season remains relatively low. The market's investor sentiment and capital flows will continue to be driven by Bitcoin's dominance in the short term.
Overall, despite the significant correction in the altcoin market, the market remains confident about the future. The current pullback may be part of a market correction in preparation for the next leg higher. However, Bitcoin will still dominate the market in the short term, and it may take more time and positive catalysts from the market for altcoins to achieve a full-scale explosion.