Bitcoin dip to $112K lacks whiff of altcoin summer: Bitfinex
The performance of the altcoins this week suggests “rapid derisking across the high-beta segments” of the crypto market.
Altcoins’ failure to rally after Bitcoin’s recent drop to $112,000 has sparked debate about whether altcoin season is on the near-term horizon.
Bitcoin briefly fell to $112,044 on Sunday, followed by a volatile few days before reaching $113,839 at the time of publication, according to Nansen.
The decline comes just weeks after the cryptocurrency reached new all-time highs of $123,100 on July 14.
“Speculative appetite” declining across the crypto market
Several major altcoins also slumped in the past week. Solana has been down 9.45% over the past seven days, while XRP has also retraced 5.48%, and Dogecoin has been down 10.80%.
“Interestingly, this break did not translate into a sustained altcoin bid — quite the opposite,” Bitfinex analysts said in a markets report on Tuesday.
These losses come despite signals that have historically preceded an altcoin rally.
Over the past 30 days, Bitcoin dominance has dropped by nearly 5.5%, while Ether has surged by 40%, both signs that traders may be rotating into riskier assets.
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A period of consolidation could be coming
However, the simultaneous decline in altcoins suggests that investors may be just taking profits instead of moving further out on the risk curve.
“This capitulation in altcoins alongside Bitcoinʼs weakness suggests that speculative appetite is now receding across the board,” they said, adding:
“The OTHERS index, which tracks the broader altcoin market excluding the top 10 coins by market capitalisation, has also dropped 18.7 percent over the past 10 days before rebounding slightly, highlighting a rapid de-risking across the high-beta segments of the market.”
Bitfinex said the market could be entering a period of consolidation, but new macro events or strong inflows into crypto ETFs could quickly change that.
Ongoing hope for altcoin rally
However, not all analysts are convinced that altcoin season is off the table.
In an X post on Tuesday, crypto analyst Ted said, “This is your best opportunity to stack utility alts before they go parabolic.”
Merlijn The Trader said, “Alts coiling for a violent breakout.” “When this spring releases… It’s game on,” he said, pointing to the altcoin season chart pattern resembling previous years of corrective phases before another upward trend.
On July 21, the CoinMarketCap Altcoin Season Index signaled “Altcoin Season” with a 55 out of 100 score. However, by Tuesday’s update, it had flipped to “Bitcoin Season,” dropping to a score of 40 out of 100.
