Author: Nancy

Several days of rising prices have suddenly made the long-dormant altcoin market lively. Some tokens have continued to rise, and even experienced violent prices several times or even dozens of times in a short period of time, which looks like the restart of the copycat season.

However, this is not a signal of a comprehensive recovery of altcoins, but a local carnival dominated by a few strong coins.

The era of general rise is over, strong coins take over the counterfeit market

Altcoins did not see the long-awaited general rise scenario.

According to the data of the Top 1000 tokens by market capitalization tracked by CoinGecko, in the past seven days, the average increase of the top 30 tokens reached 153.5%, significantly outperforming mainstream assets such as Bitcoin, Ethereum and Solana, mainly in tracks such as Meme, Inscription, AI and infrastructure.

However, further dismantling will reveal that this round of copycat market is not equally affected, but is dominated by a very small number of assets with extreme performance. The top 10 tokens all increased by more than 100%, especially RAVE, Binance Life, and ORDI, which rose as high as 1596.2%, 307.2%, and 265.4% respectively. The performance of the remaining 20 tokens was relatively moderate, mainly concentrated in the 40%-100% range, with an average of about 65.6%. In other words, it is a small number of "top students" who drive up overall performance.

Transaction volume data also confirms this. Although the overall trading volume has picked up, funds have not flowed in evenly, but are concentrated on a few targets. In the past 24 hours, the average trading volume of these tokens was approximately US$140 million, of which only three projects, ORDI, BIO, and BASED, together accounted for nearly 70% of the trading volume, showing a strong fund concentration effect.

If further split, the assets rising in this round will be roughly divided into two categories:

• The first category is projects that have just hit new highs and are in a strong trend. Twelve projects hit new highs within one month, and most of them set new historical price records in the past two days. These tokens have good liquidity and high market attention, but have accumulated a large amount of profit taking. The current price has retraced an average of about 29.5% from its high point. Once new funding weakens or sentiment turns, a sharp correction could easily occur.

• The other type is deep oversold rebound assets. A total of 13 tokens have been away from their historical highs for more than 1 year, with the highest even spanning more than 4 years, and the average maximum decline is as high as 95.4%. Since the actual circulation market value of these projects has shrunk significantly, they only require a small amount of funds to quickly increase their value, with the average increase in the recent rebound reaching 104.4%.

From a market value perspective, the current market value of most currencies is concentrated in the range of US$20 million to US$80 million. Due to the smaller circulation of this type of medium- and low-market value projects, the price elasticity is significantly stronger than that of high-market value projects driven by the same funds, so they are more prone to rapid pullbacks. Judging from the eight projects with a market value of over 100 million, the average increase was about 340%, which means that the early market value base of these projects was not high, so they were able to achieve such a strong increase. However, as the market value is pushed up rapidly, it will be significantly more difficult to continue to achieve the same increase in the future.

The rebound space is limited, and altcoins have entered an era of differentiation

Although there are currently signs of recovery in the prices and trading volumes of altcoins, the room for rebound may be limited as the overall crypto market is still illiquid and Bitcoin continues to dominate.

The altcoin seasonal index tracked by CoinGlass shows that the current altcoin seasonal index in the market is 36, which means that the overall market has not yet formed a comprehensive altcoin season. The performance of most tokens lags behind that of Bitcoin, and funds are more concentrated in a few strong currencies.

At the same time, as a barometer of sentiment in the crypto market, CoinGlass’ Fear and Greed Index shows that the current fear and greed index in the crypto market is 22, which is in the fear zone. This low level reflects cautious sentiment among market participants, with the overall situation being oversold or pessimistic. The fear zone has occurred for approximately 30.68% of the time in history. It is a common feature in the bearish phase of the crypto market. It also shows that the current rebound has not yet been based on emotional resonance.

More importantly, the current counterfeit market is still happening in the Bitcoin-dominated stage. According to CoinGecko data, Bitcoin currently has a market share of 56.8% in the crypto market, while Ethereum has a market share of 10.7%. Until Bitcoin’s absolute market share does not drop significantly, altcoins are still more of a capital rotation asset than the main trend line.

The current rally in altcoins may be driven by these main factors:

First, geopolitical risks have eased. The easing of geopolitical risks has also provided important macro support for this round of altcoin rebound. The recent signs of easing tensions between the United States and Iran have significantly reduced market risk premiums and promoted a collective recovery in global risk assets. Crypto markets, as high-beta assets, are highly sensitive to changes in geopolitical sentiment. After risk aversion eased, investor risk appetite rebounded, and some profit-making funds rotated from mainstream assets such as Bitcoin to more flexible altcoins, which also amplified the rise of individual strong products.

Second, profit-making capital rotation. Bitcoin has continued to strengthen recently and is approaching US$75,000, and early investment funds have made considerable profits. When Bitcoin enters a stage of high consolidation and slowing down of upward momentum, some profit-making funds begin to flow out and turn to altcoins with smaller market capitalization and greater potential growth space, thereby seeking higher returns.

In particular, many established altcoins are in a severely oversold range. Once liquidity is replenished, it is easy to trigger a rapid rebound. This, coupled with the amplification effect of the derivatives market, will further push up prices. However, it should be noted that the rebound of such assets mainly relies on sentiment repair or external catalysts, rather than improvement in fundamentals.

Secondly, the bookmaker has a high degree of control over the market. The violent rise of a few currencies is due to the centralized control of chips by project parties or bookmakers. This type of asset has extremely low liquidity and its price is easily manipulated. It is essentially closer to a liquidity game than to free market pricing. For example:

• More than 90% of the supply of RAVE is concentrated in 3 Gnosis Safe wallets that are suspected to be team or internally controlled. By inducing short positions to be opened, the supply tightens and triggers a short squeeze, causing the price to skyrocket. After the sharp rise, the market immediately experienced large selling pressure and whale shipments;

• SIREN was also monitored to see intense market manipulation after bookmakers regained control of more than 93% of the tokens, causing the currency price to rise sharply;

• Meme During the currency’s surge in life, its control cluster also continued to increase its holdings, accounting for more than 22% at one time.

Third, the catalysis of narrative and news. Including financing progress, sector rotation, and the driving effects of popular concepts such as AI, it provides short-term impetus for currency price increases, but the sustainability and room for growth are limited, and the overall trend is more transaction-driven than trend-driven.

It should be noted that among the tens of millions of altcoins, there are still only a handful of them that can really pull the market. Matt Hougan, chief investment officer of Bitwise, recently pointed out that the traditional altcoin season of generally rising markets may have ended, and will enter a more differentiated and non-traditional altcoin cycle in the future.

CryptoQuant analyst Darkfost also said that about 47 million cryptocurrencies have been issued globally. The huge number directly leads to severe dilution of liquidity, making the overall altcoin increasingly fragile.

Overall, although a few strong altcoins have amplified the market effect, most assets are still in a liquidity vacuum. Investors need to stay awake when participating and be fully alert to profit-taking selling pressure, market maker manipulation risks, and violent fluctuations caused by low liquidity.