New data from Glassnode has revealed that the global altcoin market is undergoing one of its sharpest devaluations in history.
Meanwhile, Bitcoin (BTC) has remained relatively stable despite volatile price swings. This showcases a stark divergence between the largest cryptocurrency and the broader altcoin sector.
Altcoins Face Historic Devaluation
Glassnode’s latest on-chain newsletter detailed the volatility in the Bitcoin market last week. Macroeconomic conditions, including President Trump’s proposed tariffs on Canada, Mexico, and China, were listed as the driving facts behind it.
These geopolitical tensions created an uncertain environment for investors. In addition, the continued strength of the US dollar contributed to a constrained liquidity environment.
Despite these fluctuations, Bitcoin demonstrated relative stability, fluctuating between a low of $93,000 and a high of $102,000. This indicated a generally sideways market.
Glassnode’s analysis attributed the stability to increased liquidity and larger capital flows, which offset the momentum of a growing asset.
“The growing presence of a more resilient and patient holders has contributed to the stability of BTC prices, even amidst a relatively unstable macro backdrop,” Glassnode noted.
In contrast to Bitcoin’s relative resilience, altcoins have faced significant challenges. By using Principal Component Analysis (PCA), Glassnode declared that most ERC-20 tokens were closely clustered, indicating a broad-based sell-off across the altcoin market.
This suggested that very few altcoins managed to avoid the volatility and move independently.
“The Altcoin sector took the heaviest relative losses during the downturn, with the global altcoin market cap experiencing one of its biggest devaluations on record,” the newsletter read.
The severity of this sell-off was evident in the global altcoin market capitalization, which saw a $234 billion decline over a 14-day period. Yet, Glassnode acknowledged that this decline was not as severe as previous crashes. These included the Great Miner Migration in May 2021 and the LUNA/UST and 3AC collapses in late 2022.
Is Altcoin Season Still a Possibility?
Meanwhile, a crypto analyst on X drew attention to a recurring trend in crypto cycles. The analyst highlighted that Bitcoin dominance peaks as it reaches new all-time highs, while altcoin dominance hits lows. This phase often creates a sense of desperation among altcoin investors, who feel late in the cycle.
Nonetheless, based on past trends, the analyst revealed that Bitcoin’s dominance typically declines after its second big price jump to new record highs. This is followed by a rise in altcoin dominance.
“I still expect Bitcoin dominance to drop and Altcoin dominance to increase,” the post read.
However, the analyst addressed that the current cycle is more intense due to more altcoins and fewer investors holding Bitcoin at higher prices. Thus, the money flow follows Bitcoin first, then major altcoins, and finally, mid- and low-cap altcoins.
Another analyst also pointed to a major signal for the altcoin season.
“Some altcoins are decoupling from Bitcoin for the first time since 2022—this is the first signal of the bull run!” he stated.
The analyst believes significant altcoin rallies are likely before Bitcoin is officially declared the reserve currency. He expects profits from Bitcoin to flow into altcoins, which could trigger an altcoin season.
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