Altcoins Show Signs of Recovery Amid Market Caution
Key Takeaways
- A technical indicator is currently signalling a potential buying opportunity for altcoins.
- Altcoin trading volume is below the long-term average – a historically bullish signal.
- Bitcoin (BTC.D) and Tether (USDT.D) dominance currently reflect investor caution.
- Low funding rates and a low RSI suggest the altcoin segment may be undervalued.
- Some altcoins, such as Onyxcoin (XCN) and Curve DAO (CRV), are already showing strong price gains.
Are Altcoins Becoming Attractive Again After the Drop?
Following a significant decline in the altcoin market at the beginning of 2025 – with losses of over 65% for Ethereum (ETH) and Solana (SOL) – a new opportunity may be emerging for medium-term investors. According to analyst “DarkFost” from the analytics platform CryptoQuant, the market is currently in a so-called “buy zone.”
This assessment is based on the ratio of 30-day trading volume to the yearly average. When short-term volume falls below the long-term average, it historically indicates undervaluation. This last occurred in September 2023 – just before the market saw a notable upswing.
What Do Other Market Indicators Say?
In addition to trading volume, other metrics also provide insights into the current situation. Particularly relevant are the dominance values of Bitcoin (BTC.D) and Tether (USDT.D):
- BTC.D: Indicates the percentage of total market capitalization that belongs to Bitcoin. An increase means capital is flowing out of altcoins into Bitcoin.
- USDT.D: Shows Tether’s share of the total market capitalization. An increase suggests that investors are moving capital into stable assets.
Both values are currently elevated. BTC.D stands at 63.5%, and USDT.D at 5.6%. This suggests a cautious market sentiment. Many investors are parking their capital in Bitcoin or stablecoins rather than riskier altcoins.
Low Leverage as a Positive Signal
Another aspect: current funding rates and the Relative Strength Index (RSI) suggest a calm market environment. While the second half of 2024 saw overheated funding rates of up to 80% – a sign of excessive speculation – these values are now below 10%. This indicates a healthy market structure without excessive leverage.
At the same time, the RSI shows that many altcoins are currently trading below their fair value. This could create room for price increases in the medium term – assuming the macroeconomic environment remains stable.
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Individual Altcoins Showing Strong Performance
Despite the general caution, there are exceptions. Some altcoins have clearly outperformed the market in recent days:
- Onyxcoin (XCN): Over 100% price gain in the past week.
- Fartcoin: Also more than 100% increase.
- Curve DAO (CRV): Around 50% increase within one month.
These outliers show that selective opportunities exist in the market – even though the broader altcoin sector is still waiting for a trend reversal.
Our Assessment
If you’re considering entering the altcoin market, now might be a good time to take an initial position. Technical analysis shows signs of bottoming out. Low trading volumes, low funding rates, and a weak RSI point to an undervalued market environment.
However, investor caution remains noticeable – as reflected by the high dominance of Bitcoin and Tether. A sustainable recovery in the altcoin sector therefore strongly depends on external factors, such as interest rate policy developments or regulatory conditions.
For those thinking long-term and not speculating on short-term gains, selective investing could be worthwhile now. Important: diversify your risk and monitor market dynamics closely.
Sources
- CryptoQuant
- TradingView
- Coinglass
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