Altseason Remains Delayed as Bitcoin Dominance Stays High and Liquidity Dwindles

output: Over the last 24 hours, the cryptocurrency market has seen little movement. With a 0.11% gain, the trading volume dropped sharply to $153.08 billion, marking a 3.57% decline. Several major altcoins, including ETH, XRP, and DOGE, fell on the charts too, dropping by 0.81%, 0.54%, and 0.34%, respectively, within the same period.

While the market appears to be entering a recovery phase, with assets slowly regaining lost value, new insights suggest that an altseason might remain delayed.

This delay can be attributed to a lack of significant changes in key market metrics, including liquidity flow and overall market sentiment.

An analyst on Twitter highlighted this, stating that altcoins are still in a stalled phase, with limited liquidity flowing into these assets, ultimately delaying the much-anticipated altseason, where altcoins typically see significant upward momentum.

Charts presented by the analyst revealed that altcoin market capitalization – depicted on the right – has barely surged, remaining only slightly above $1.6 trillion. This is comparable to the peaks observed during the 2021-2022 altcoin rally.

However, Bitcoin exhibited a different trend. Its market capitalization has nearly doubled since hitting its previous all-time high in 2022, now exceeding $2 trillion.

This indicates that the current market cycle is being led by Bitcoin, with the majority of new investment capital being directed towards it, rather than altcoins. This shift can be attributed to the entry of institutional investors and the launch of Spot Exchange-Traded Funds (ETFs) in the United States.

The stagnation of altcoin market capitalization suggests that funds are merely rotating between different altcoins, with little to no new liquidity entering the market. If this trend continues, it would mean that the altseason will remain delayed, with altcoins only seeing minor gains or isolated rallies based on prevailing market narratives.

Meanwhile, the broader cryptocurrency market has also seen a sharp decline in liquidity. According to Glassnode’s Aggregate Realized Value Net Position Change metric, which measures liquidity inflows and outflows, liquidity has dropped by 49% over the past month, falling from $134 billion to $68 billion.

This liquidity crunch is evident in the market's overall state, as many altcoins are yet to recover to their previous all-time highs, last reached in late 2024.

A key indicator for an altcoin rally has traditionally been a significant decline in Bitcoin dominance, often followed by successive market-wide gains for altcoins.

Bitcoin dominance measures the proportion of the total cryptocurrency market capitalization held by Bitcoin relative to altcoins. When Bitcoin dominance increases, altcoins typically underperform as capital flows back into Bitcoin. This trend is currently evident in the market.

At press time, Bitcoin dominance on CoinMarketCap stood at 0.5672 – A relatively high value. A drop to around 0.45 would point to a shift in market control towards altcoins, potentially sparking an altcoin rally.

However, until key metrics such as Bitcoin dominance, capital inflow into the market, and liquidity in altcoins improve, the long-anticipated altseason will remain delayed.