Is Altcoin Season Over? Insights from Wintermute on Bitcoin's Dominance

As we approach the end of the year, Bitcoin's dominance continues to surge, pushing altcoins into a corner under significant supply constraints and a challenging token unlock schedule.

Key Takeaways

Bitcoin's market dominance is increasing, leading to a retreat by retail investors from altcoins to major assets.
Recent market conditions saw Bitcoin drop to just below $87,000, while Ethereum approached $3,000.
The altcoin market, particularly NFTs, has experienced notable declines due to a lack of short-term investor appetite.
Bitcoin and Ethereum are absorbing market pressure, yet volatility persists.
Traditional financial institutions are still investing in crypto, which may offer support for future growth despite current market fluctuations.

Wintermute Warns: Altcoin Season Is Dead as Bitcoin Dominance Soars

Bitcoin and Ethereum Under Pressure

Last week, cryptocurrency markets faced significant downward pressure. Bitcoin temporarily dipped below $85,000 midweek, and Ethereum fell through the $3,000 mark. This volatility led to about $600 million in liquidations on Monday, followed by daily liquidations of around $400 million on Wednesday and Thursday, reflecting a chaotic trading environment that forced many leveraged positions to unwind rapidly.

Bitcoin managed to recover slightly, approaching $90,000 later in the week, but overall price momentum remained constrained. The perpetual open interest saw a drop of $3 billion for Bitcoin and $2 billion for Ethereum overnight, which makes markets susceptible to sudden price swings despite lower leverage as we head into the holiday season.

Wintermute's internal data shows a return of buying pressure on major cryptocurrencies, with consistent backing from institutional investors since summer. However, retail traders are increasingly moving out of altcoins and returning to Bitcoin and Ethereum, indicating a widespread belief that Bitcoin needs to lead the market for a sustainable risk appetite shift.

Market Dynamics and Challenges for Altcoins

As liquidity diminishes and discretionary trading activity slows down towards the year’s end, markets have become range-bound. Sudden downturns still occur, but they tend to be more contained as capital is pulled back toward the highest liquid assets.

Bitcoin and Ethereum are acting as the primary buffers against market volatility, while the altcoin sector struggles under mounting supply pressures and a limited appetite for risk. According to Wintermute, "Funding and basis across majors remained relatively compressed through the sell-off," indicating that options markets are pricing a broad spectrum of potential outcomes as implied volatility remains high.

A recent analysis from Galaxy Research highlights that Bitcoin's price when adjusted for inflation using 2020 dollars never exceeded $100,000, despite reaching an all-time high of over $126,000 in October. Alex Thorn from Galaxy stated, "If you adjust the price of Bitcoin for inflation using 2020 dollars, BTC never crossed $100,000," noting it peaked at $99,848 in inflation-adjusted terms.

Institutional Interest Provides Some Stability

Traditional finance participants continue to engage with cryptocurrency even amidst market volatility, facilitating a stronger foundation for potential long-term growth. For example, Bitmine has added 67,886 ETH, valued at $201 million, to its treasury, bringing its total December acquisitions to approximately $953 million.

However, flows from Bitcoin and Ethereum ETFs have turned negative since early November, reflecting a decrease in institutional involvement and a broader contraction of crypto-market liquidity. Over the last four days, Bitcoin ETFs recorded outflows of $650.8 million, with BlackRock's Bitcoin ETF facing the sharpest single-day withdrawal of $157 million. Ethereum also experienced a net outflow of $95.52 million, with all nine Ethereum ETFs recorded no inflows, as reported by SosoValue.

Farzam Ehsani, the co-founder and CEO of VALR, suggests two possible scenarios as we look ahead to 2026. "Either the current drawdown reflects strategic positioning by large players ahead of renewed accumulation, or the market is undergoing a more significant reset due to macroeconomic challenges and Federal Reserve policies," he explained.

On a more optimistic note, David Schassler from VanEck emphasized a constructive perspective amidst current market weaknesses. He pointed out, "Bitcoin is trailing the Nasdaq 100 Index by about 50% year-to-date, and that dislocation is preparing it to be a top performer in 2026." Ehsani believes there is potential for Bitcoin to revisit the $100,000 to $120,000 range in the second quarter of 2026, but cautioned that "without the emergence of new major players, there will be no altcoin season; at best, we can expect a market recovery to previous levels."