Glassnode released its latest weekly report, indicating that while Bitcoin experienced a significant drop to $93,000 last week, it has not deviated too far from the starting point of the current cycle. The market remains predominantly characterized by volatility and consolidation; however, the situation for altcoins is notably dire, with the market capitalization of altcoins plummeting by $234 billion over the past two weeks, marking one of the largest declines in altcoin history.
(Background: Powell’s hint at not lowering interest rates did not trigger a crash in altcoins, analysts suggest this is a bottom signal for the market.)
(Additional context: Bloomberg analysts forecast the approval probabilities of four major altcoin ETFs (SOL, XRP, DOGE, LTC), with ADA spot ETF also joining the fray.)
On the 11th, Glassnode stated in its weekly report that Bitcoin investors experienced extreme volatility last week, with the price dropping to $93,000. During this turbulent period, Bitcoin investors realized losses amounting to $520 million, one of the largest losses in this bull market cycle, surpassed only by the losses on August 5, 2023.
This extreme price volatility is primarily attributed to Trump’s threats to impose tariffs on Canada, Mexico, and China, which has created significant uncertainty in the overall macroeconomic environment, leaving investors in a wait-and-see mode. Additionally, the sustained strength of the dollar has exerted some pressure on the market’s liquidity environment.
However, Glassnode pointed out that despite the significant fluctuations in Bitcoin over recent weeks, it has not strayed too far from the starting point of the current cycle. The market remains focused on oscillation and consolidation, thanks largely to a marked increase in liquidity entering the cryptocurrency market and the counteracting effect of large capital flows against price inertia. Furthermore, a new cohort of more steadfast holders has emerged, promoting relative stability in Bitcoin’s price, even amidst a turbulent macro environment.
Record Decline for Altcoins
In stark contrast, the altcoin market has faced severe downturns. Glassnode reported that over the past two weeks, the market capitalization of altcoins has decreased by $234 billion, with a few days seeing even greater absolute declines. It is reasonable to consider this a bear market event for altcoins, marking one of the largest downturns in their history.
Regarding the significant selling pressure in the altcoin sector, Glassnode believes that many assets struggle to achieve widespread adoption or establish a solid market position, making the market environment more challenging and leading to massive price collapses for altcoins. In recent weeks, all categories of altcoins have underperformed compared to Bitcoin.
Glassnode found that the vast majority of altcoins have undergone a uniform sell-off, with little distinction between different categories of altcoins. In simple terms, the altcoin market has nearly declined in unison, with only a few altcoins escaping this fate.
Glassnode analyzes that overall, the altcoin market is mired in a bear market; however, Bitcoin remains in good shape and has not exhibited similar signs of weakness, indicating an expanding divergence between Bitcoin and the broader digital asset market.
Currently, key support levels for Bitcoin have been identified: the MVRV Z-Score (a metric indicating whether the market is overvalued or undervalued) is at an average of $96,300, and the cost basis of short-term holders is at $92,200. In contrast, the outlook for the altcoin market appears more uncertain, with optimism gradually dissipating as market capitalization continues to decline.
