Decreasing Demand for Altcoins Raises Doubts About Altseason Continuation, According to Bitfinex Analysts

The sluggish recovery of altcoins following the correction in Bitcoin has raised doubts about the continuation of the altcoin season, according to analysts from the Bitfinex exchange.

On August 3, the price of Bitcoin briefly dipped to around $112,000. As of the time of writing, the value of the digital asset is $114,213, reflecting a 0.5% decrease over the past day, as reported by CoinGecko.

In the past week, Solana has seen a decline of 7.8%, XRP decreased by 4.7%, and Dogecoin dropped by 8.4%. Bitfinex analysts noted that recent Bitcoin price movements have not resulted in a sustained increase in demand for alternative cryptocurrencies.

The decline occurs despite historical signals that typically precede sector rallies. Over the last month, Bitcoin’s dominance has dropped by nearly 5.5%, while Ethereum’s price has surged by 40%.

Bitfinex analysts believe that the simultaneous decline across cryptocurrency prices indicates that investors are locking in profits rather than moving towards riskier assets. They pointed out a decrease in “speculative appetite” across the entire market.

The OTHERS index, which tracks altcoins outside the top 10, has fallen by 18.7% in the last ten days. Experts believe the market is entering a phase of consolidation, which could be altered by new macroeconomic drivers or an influx of funds into cryptocurrency ETFs.

However, some analysts disagree with the notion that the altcoin season has come to an end. An analyst known as Ted has labeled the current situation as “the best opportunity to accumulate useful coins.”

His colleague, Merlijn The Trader, also anticipates a “sharp breakout” for altcoins.

Michael van de Poppe, an analyst and founder of MN Trading, suggested that a rise in gold prices might be imminent. He believes this could exert pressure on the altcoin market.

He noted that August is traditionally seen as an unfavorable month for risk assets, including cryptocurrencies.

Van de Poppe emphasized that such periods typically create local lows, making it an ideal time to build positions.

On July 21, the CoinMarketCap Altcoin Season Index was at 55 out of 100, which indicated an “altcoin season.” By August 6, it had dropped to 35 points, entering the “Bitcoin season” range.

The correction followed just a few weeks after the all-time high where Bitcoin surpassed $123,100.

Analysts from Glassnode observed a weakening upward momentum and a decline in investors’ risk appetite.

The RSI index fell from 47.4 to 35.8, entering oversold territory. Selling pressure intensified, and spot trading volumes decreased from $8.4 billion to $7.5 billion, indicating low market activity and liquidity.

On-chain metrics show mixed dynamics. The number of active addresses increased by 3.6% to 729,000. Meanwhile, the volume of transfers on the network dropped by 13.9%, and fees decreased by 14.4%, signaling an overall lull.

Although capital inflow into the asset remains strong, it is slowing down. Profitability metrics have declined, with the share of profitable supply dropping to 93.6%, reflecting more cautious investor sentiment.

Glassnode concluded that the market has transitioned from euphoria to reevaluation. Conditions of oversold territory and a potential exhaustion of sellers may create a foundation for a rebound. However, the market structure remains fragile and vulnerable to external negative factors.

It’s worth noting that CryptoQuant CEO Ki Young Ju stated that the Bitcoin cycle theory no longer holds true. The expert acknowledged the inaccuracy of his earlier predictions.