Altcoin Season Postponed Amid Persistent Fear in Cryptocurrency Market

The long-awaited altcoin season continues to be out of reach as the Crypto Fear and Greed Index remains in the fear territory while Bitcoin maintains its dominance.

Key Takeaways

The Altcoin Season Index has fallen to 21, down from 55 in July.
Many altcoins, including Double Zero and Celestia, have dropped over 60% in the last three months.
Bitcoin dominance has risen to 58%, while Ethereum dominance has decreased to 11%.
The Crypto Fear and Greed Index currently sits at 21, reflecting market apprehension.
Investors are advised to be cautious, with warnings from market experts about the viability of many altcoins.

Altcoin season delayed as Crypto Fear and Greed Index remains in red - 1

The current state of the cryptocurrency market shows that altcoin season is delayed, primarily due to Bitcoin’s price corrections and a prevailing sense of fear among investors. Recent data indicates that several altcoins have significantly underperformed compared to Bitcoin, resulting in a higher Bitcoin dominance ratio. With the recent market liquidation event weighing heavily on investor sentiment, caution prevails as many are reevaluating their positions in altcoins.

The Altcoin Season Index in Decline

According to data from CMC, the Altcoin Season Index has decreased to 21, a significant drop from its high of 55 recorded in July. This decline coincides with a continued underperformance of most altcoins compared to Bitcoin during the ongoing market downturn.

Altcoin Season Index | Source: CMC

In the past three months, several altcoins have suffered substantial losses, with tokens such as Double Zero, Story, Celestia, Ethena, Pudgy Penguins, Cronos, Aptos, and Arbitrum seeing declines of over 60%. This downturn has allowed Bitcoin's dominance in the market to continue rising, jumping from a low of 37% in January to its current level of 58%. Conversely, Ethereum's dominance has fallen from a high of 20% to just 11%.

The principal factor contributing to the ongoing absence of an altcoin season is Bitcoin's recent correction, which saw its price drop significantly from the year-to-date peak of $126,200 to today's price of $89,000. Typically, altcoins thrive when Bitcoin is in a strong upward trend.

Current Market Sentiment: Fear and Caution

The cryptocurrency market is currently mired in fear, especially following a significant liquidation event that took place on October 10, where more than $20 billion was erased from the market. Since that event, investors have been increasingly focusing on deleveraging, resulting in a decline in futures open interest from $225 billion in October to the current $122 billion. Additionally, the funding rates across tokens have flattened, and the Crypto Fear and Greed Index has dropped to 21.

Crypto Fear and Greed Index | Source: CMC

Investor apprehension towards altcoins is palpable, with Kevin O'Leary cautioning that many of them may not hold value in the long run, suggesting that only Bitcoin and Ethereum are expected to endure over time. Data supports this caution, as various meme coins like Shiba Inu and Pepe have experienced more significant declines in recent months.

Despite the current negativity, there are potential positives that could invigorate the crypto market. Historically, altcoin seasons tend to emerge when the Altcoin Season Index is considerably low. Furthermore, these seasons typically coincide with a Crypto Fear and Greed Index that reflects fear among investors.

Additionally, news about an upcoming Federal Reserve interest rate decision suggesting a potential rate cut could provide the market with a much-needed boost, alongside the possibility of a Santa Claus rally uplifting both stock and cryptocurrency values.