Altcoin Season on Hold? Technical Struggles Keep Altcoins Below Key Indicators as Bitcoin Dominance Grows

As technical challenges mount and Bitcoin's dominance rises, altcoins are finding it hard to gain traction.

Key Takeaways

Altcoins are approximately 27% below their 200-day simple moving average, indicating ongoing weakness.
Bitcoin’s dominance in the market has risen to about 58-59%, limiting capital flow into altcoins.
Investor sentiment remains cautious, with reduced trading activity and lingering fear in the market.
On-chain metrics suggest that while Bitcoin is experiencing steady accumulation, altcoins are not yet recovering.

Altcoin season delayed

Altcoins are currently facing difficulties as Bitcoin's market dominance prevents a significant shift toward altcoin investment. Recent analyses show that altcoins are lagging and trading far below their key moving averages, leading to a delay in the anticipated altcoin season.

Altcoins Struggle Against Technical Obstacles

Altcoins continue to underperform compared to Bitcoin, primarily due to ongoing technical challenges and a shift in capital towards Bitcoin, delaying hopes for an altcoin season. A recent analysis by CryptoQuant contributor Arab Chain reveals that the average altcoin is trading roughly 27% below its 200-day simple moving average (SMA). This key indicator is closely monitored by traders and signals ongoing weakness in the market.

The trend is evident across major exchanges. On Binance, a platform known for its liquidity, the average altcoin trades about 30.8% below its 200-day SMA. Similar patterns can be found on other major exchanges like Bybit, Gate.io, and KuCoin, indicating that the issue is widespread, not merely confined to a few specific tokens.

Some exchanges, such as OKX, are showing slightly better performance, potentially due to the types of tokens offered or traders' strategies. However, these areas of resilience have not significantly altered the broader negative trend. Meanwhile, platforms such as Kraken and Crypto.com have experienced even more severe losses, highlighting how quickly market confidence can wane.

Rising Bitcoin Dominance Affects Altcoins

Bitcoin Bitcoin btc1.22% currently holds a market dominance of approximately 58-59%, following a steady upward trend. This shift means that there hasn’t been a substantial rotation of capital into altcoins, contributing to the short-lived rallies seen among select altcoins.

As Bitcoin's dominance continues to hit crucial resistance levels, the prospect of an upcoming altcoin season appears to be fading. If Bitcoin's market share approaches the 60% mark, altcoins may face further declines before any recovery is seen. This cautious outlook is supported by prevailing market sentiment, with the Crypto Fear & Greed Index remaining in fear or extreme fear territory, indicating reluctance among investors to take on additional risk.

Moreover, engagement and speculative trading have dipped sharply—almost by half—over recent weeks, signifying waning retail interest in the market. Even prominent industry figures are tempering their expectations; Bitget's CEO suggested that an altcoin season might not materialize until 2025 or 2026, attributing the focus shift to Bitcoin and real-world asset investments.

On-Chain Data Reveals Bitcoin's Resilience Over Altcoins

A further analysis by CryptoQuant contributor MorenoDV_ sheds light on why Bitcoin continues to attract capital. The NVT Golden Cross for Bitcoin, which reflects the relationship between market value and on-chain transaction activity, recently fell to notably low levels near -0.58. Historically, this threshold indicates that price declines are outpacing network usage.

Since then, this indicator has bounced back to -0.32, suggesting that Bitcoin is still trading at a discount while gradually aligning with its underlying activity. Rather than inciting aggressive risk-taking, this phase is often characterized by steady accumulation. In previous instances, similar setups have favored Bitcoin before altcoins see any significant investment, which typically occurs once market sentiment improves and liquidity returns.

Currently, both technical indicators and on-chain metrics validate this narrative. While Bitcoin captures the majority of market attention, altcoins continue to face challenges. Until Bitcoin's dominance declines and investors become willing to embrace greater risk, the recovery prospects for altcoins appear to remain distant.