Crypto Sentiment Turns Bearish as Altcoin Season Index Falls to 21

• Crypto market pressure grew as CMC Altcoin Season Index fell to 21 from 55 in July.
• Bitcoin dominance climbed to 58% while ETH dominance dropped to 11%, per CMC.
• Oct 10 wipeout preceded deleveraging as open interest fell to $122B and fear hit 21.

The crypto market continued under pressure with new CMC data reporting the Altcoin Season Index at 21. The reading is below the 55 level it reached in July of this year. The slide follow on from further weakness from many other altcoins against Bitcoin. 

Altcoin domination is when a leading altcoin rallies and consolidates, while its brethren also rise in price. The index serves as a barometer for the possible spread of such broad leadership among the group.

Source: CMC

Crypto Altcoins Sink as Bitcoin Dominance Climbs

CMC’s data also indicated steep declines for multiple tokens in the past three months. Celestia, Ethena, Pudgy Penguins and Cronos were among the big laggards. All of those tokens dropped more than 60% in that time. The action cycled pressure into the broader altcoin market.

Also Read: Altcoin Leverage Surge Sparks Warning of Mass Liquidations

As altcoins fell, Bitcoin’s share of the overall market increased. According to CMC BDI returned to 58% today. It was at 37% in January. The move underscored stronger relative performance by Bitcoin over the same period.

Ethereum bucked the trend on dominance. Data from CMC put ETH’s dominance as high as 11% today. It was at a year-to-date high of 20 earlier in the year. The drop demonstrated that Ethereum lost market share as well.

The weak altcoin backdrop has been connected by CMC analytics to a correction in Bitcoin. BTC dropped by double digits off a year-to-date high of $126,200. It was trading around $89,000 when the data point mentioned was recorded. The pattern is important because altcoins tend to do the best when Bitcoin surges.

Crypto risk appetite remained morbid following the October 10 wipeout. More than $20 billion was wiped out in that episode, the update also said. That shock caused many traders to deleverage. It eroded appetites for leveraged bets, too.

Deleveraging spread, and crypto derivatives activity cooled. That data cited futures open interest dropping between $225 billion in October to $122 billion. Funding rates across tokens flattened. The move indicated reduced aggressive long positioning.

Source: CMC

Sentiment Shifts as Macro Catalysts Loom

Another crush that confronted crypto altcoin sentiment in all of this came from Kevin O’Leary. He cautioned that most altcoins are worthless. He posited that only Bitcoin and Ethereum will ultimately survive. The remarks contributed to skepticism about smaller tokens.

Crypto meme coins slumped more in recent months, according to the same summary. They are called Shiba Inu and Pepe, for example. Many larger assets slumped less sharply. Those results helped fuel concerns about risk in the segment.

Crypto observers also pointed to potential bullish signals in the same update. It said altcoin seasons tend to begin when the Altcoin Season Index appears extremely negative. Such phases are often observed when the Fear and Greed Index is in fear, it added. Those were the conditions that precipitated the quoted readings.

Crypto markets also confronted a short-term macro focus. The message graced an upcoming Federal Reserve interest rate decision. Officials were “likely” to cut rates, according to the note. It also referred to a potential Santa Claus rally for stocks and cryptocurrencies.

Also Read: Altcoin Rally Pauses as Latest 48.2 PMI Data Confirms Slowdown