The cryptocurrency market capitalization has recently decreased, down 1% to $3.33 trillion. However, broader analysis shows a decline of up to 18.33%, from $3.7 trillion in November to $3.28 trillion on December 24.
In the past 24 hours, while the market has declined, trading volume has increased by 3.3%, reaching $121.84 billion. This indicates that the selling pressure from traders is driven by actual circumstances.
This downward market trend usually has a significant impact on the performance of altcoins, especially since these tokens often move in line with overall market trends. In fact, analysis shows that the decline in capital inflow plays a key role in the ongoing market weakness.
Liquidity cash flow has significantly decreased.
Funds flowing into the cryptocurrency market have significantly decreased. This indicates a lack of active investment.
The total market has shown a net position change indicator, indicating that capital inflow has dropped from $134 billion on December 10 to $100 billion at the time of writing.
For most cryptocurrencies, this malaise usually indicates a lack of bullish sentiment in the market. Instead, investors tend to prioritize holding stable assets rather than purchasing volatile tokens. This will reinforce the market's bearish sentiment while increasing the risk of further declines.
Despite generally low capital inflows, some tokens are expected to maintain strong growth momentum and potentially outperform the overall market.
BNB will set a new high.
Binance Coin (BNB) remains one of the best-performing cryptocurrencies of 2024, having set two historical highs during the year.
After reaching a previous peak of $691.77 in 2021, BNB's price broke through this level in June 2024, reaching $721.80 on the chart. By December 2024, it set another record, trading at $793.86.
As of the time of writing, BNB seems to be in an accumulation phase. If it can overcome this period, BNB may initiate another bull market, potentially breaking previous highs and reaching targets above $800.
AAVE remains on a bullish trend.
On the price chart, AAVE still maintains a position in the bullish zone. After several months of a stable market, this asset had a strong breakout in January, surging 332.78% to $399.85, a level last seen in 2021.
On December 17, AAVE's total value locked (TVL) reached a new high of $23.19 billion. However, TVL has since slightly dropped to $20.63 billion. Nevertheless, AAVE remains fundamentally bullish, particularly as activity on its protocol continues to increase.
If TVL remains stable or continues to grow, the price of AAVE may continue to rise. Especially since it plays a core role in driving platform operations.
Altcoin season is on the way.
A key condition for a bull market in the altcoin season is a decline in Bitcoin's (BTC.D) dominance, an indicator that compares Bitcoin's performance against other altcoins in the market. When BTC.D is high, it indicates Bitcoin is performing better than most altcoins. Conversely, a lower dominance indicates stronger performance from altcoins.
As of the time of writing, BTC.D is currently at 58.8%.
Since BTC.D remains relatively high, the altcoin season may be delayed. At least before a significant market downturn, the index may drop below the 50% mark.
Altcoins performed weaker than the benchmark index this week, showing a significant downward trend. The liquidity has sharply decreased due to the Christmas holiday, increasing the volatility of market prices, making sudden surges and drops more likely. Consequently, market sentiment is not very optimistic. Given the current market structure, it is expected that Altcoins will stay in sync with the benchmark index in the short term, with a low probability of independent price movements.
When altcoins are in a state of extreme panic, the market is often at a cyclical bottom, ready for an upward reversal at any time.
