Altcoins are experiencing one of their most significant devaluations due to widespread pressure from the sell-side. Liquidity is concentrated in a small number of trading pairs.
A recent Glassnode Report states that weak adoption, product-market fit and other factors have exacerbated the struggles. The result has been a broad range of losses in all altcoin segments. In recent weeks altcoins are significantly below Bitcoin (BTC).
Principal Component Analysis revealed that ERC-20 tokens are highly correlated in their price movement. The sector is experiencing a sell-off, with few assets showing any differentiation.
Artemis: Data for the Educator The following is a list of the most recent and relevant articles. that the average market performance since the Feb. 2 crash has been negative 3.4%, below BTC’s 1.5% price decrease in the same period. Additionally, just five of the 21 altcoin sectors tracked by Artemis displayed better average performances than Bitcoin’s.
This report showed that over the past 2 weeks the market capitalization of altcoins has decreased by $234 Billion. There have only been a small number of events in history where the absolute drop was greater.
This substantial loss reinforces the notion of a bear market within the altcoin sector, contrasting Bitcoin’s relative resilience. Only 41 of the 1,662 days that have been traded in the past 1 662 trading days saw a greater decline.
However, the latest drawdown is still less extreme than May 2021’s Great Miner Migration and the TerraLUNA collapse in 2022.
Altcoin liquidity concentration
Liquidity remains concentrated despite recent improvements in sentiment following the US election and an increase in filings for altcoin ETFs.
A recent Kaiko report pointed out that daily altcoin liquidity — measured by the 1% market depth of the top 50 tokens — has nearly doubled since September, reaching $960 million.
However, the top 10 altcoins by market cap now account for 64% of total market depth, while mid-cap tokens (ranked 20–30) have seen their share decline.
In an interesting development, the liquidity shares of smaller altcoins have surpassed those with higher market caps (top 40). It is clear that the trend of rising liquidity will lead to a consolidation at its top. This leaves many altcoins exposed.
Bitcoin is showing strength compared to altcoins. A clear divergence has emerged within the market for digital assets, which raises questions about the viability on a long-term basis of numerous altcoin projects.
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