Altseason on Pause as Capital Focuses on BTC and ETH

Bitcoin has regained the $92,000 mark after experiencing $2 billion in liquidations, as both traders and investors concentrate their efforts on major cryptocurrencies. The dominance of BTC and ETH remains high, signaling a growing interest in established digital assets amid economic uncertainty.

Key Takeaways

Bitcoin has regained the $92,000 level, despite facing $2 billion in recent liquidations.
There is a noticeable shift in market focus towards major cryptocurrencies like Bitcoin (59.11% dominance) and Ethereum (12.80% dominance).
Upcoming central bank decisions are anticipated to impact market volatility and rate differentials.
Current market trends indicate limited appetite for altcoins, with traders preferring capital efficiency strategies.
An altcoin season is unlikely in the near term, requiring stabilization in BTC and macroeconomic clarity for a change.

Currently, the crypto market is undergoing a phase of consolidation, marked by tighter basis rates and a drop in open interest. Consequently, both institutional and retail investors are channeling funds into the most credible assets, showing less interest in leverage trading.

Shift in Market Focus Towards Bitcoin and Ethereum

Crypto traders are increasingly pivoting toward major cryptocurrencies. Bitcoin maintains a dominance of 59.11% of the total market capitalization among the top 125 cryptocurrencies. Meanwhile, Ethereum holds a dominance of 12.80%, with minor daily fluctuations confined within a narrow range of 12.78% to 12.81%.

According to the latest market insights from Wintermute, this shift toward major cryptocurrencies reflects a wider trend of selective risk-taking, rather than broad market exposure. The trading firm noted that both retail and institutional investors are making rare simultaneous investments in BTC and ETH. This indicates that market participants are opting for quality as momentum in the Nasdaq wanes.

The recent sharp decline of $4,000 in Bitcoin's intraday value last Friday underscored the vulnerability of the current recovery phase. This drop was triggered by cascading liquidations that surpassed $2 billion in just over an hour. Yet, the market managed to absorb the shock without significant follow-up selling, indicating consolidation rather than capitulation.

Central Bank Actions Expected to Influence Crypto Movements

As the crypto market remains in a holding pattern, all eyes are on upcoming decisions by central banks. The Federal Reserve's rate decision scheduled for Wednesday and the Bank of Japan's meeting next week are anticipated to significantly affect rate differentials and volatility across asset classes as the year comes to a close.

Wintermute has noted that high implied volatility towards year-end suggests a divided market. Traders are eyeing potential targets of either $85,000 or $100,000 by late December. Unless there is a major surprising macroeconomic event, the crypto market is likely to stay within its current range.

The emergence of delta-neutral and carry strategies, particularly beyond major cryptocurrencies, indicates a market focused on capital efficiency while awaiting clearer signals. There has been a noticeable shift in interest towards lower-cap assets where funding conditions remain favorable, confirming a reduced appetite for directional risks associated with altcoins.

“The market is consolidating without strong commitment, with macro events set to dictate the next significant movement,” Wintermute summarized in their report. For now, traders seem more interested in capturing yield rather than speculating on potential breakouts.

Given this context, an altcoin season appears unlikely in the immediate future. With capital being funneled into BTC and ETH instead of moving towards altcoins, traders are hesitant to place directional bets on the latter. They are favoring delta-neutral strategies, but the conditions necessary for a widespread altcoin rally have not yet emerged. A sustained alt season would likely need macroeconomic uncertainties to resolve, BTC to stabilize above critical resistance levels, and a return of risk appetite—none of which seem to be on the horizon.