The past week has been significant for the cryptocurrency market, showcasing notable fluctuations. Bitcoin has managed to hold its level, while other major cryptocurrencies have demonstrated sharper declines.
Rapid Decline in Altcoins
Expectations for recovery in the cryptocurrency market were shaken by significant weekly losses in major altcoins. Data from various platforms indicate that XRP and DOGE dropped by around 18%, while SOL saw a 12% decline. The CoinDesk 80 Index, which tracks mid-sized coins, fell by 10% from its weekly peak.
Is the Altcoin Season Over?
Recent capital flows towards lesser-known tokens sparked discussions of an 'altcoin season.' CoinGlass’ Altcoin Season Index dropped from 59 to 41 over the week, suggesting a possible weakening of this season after a brief speculative surge in January.
Market and High Trading Risks
Coinbase’s Head of Research, David Duong, emphasized in his report that the total altcoin market has nearly doubled since April, however, reduced interest has been attributed to increased leverage usage in altcoin derivatives trading. Duong noted:
> 'Excessive use of leverage by investors led to rapid depreciation in the altcoin market.' – David Duong, Coinbase Research.
The Altcoin Open Position Dominance indicator also rose to 1.6, reflective of previous market upheavals. Nonetheless, Duong advised investors against taking unnecessary risks.
Current developments in the cryptocurrency market indicate short-term volatility and risks. Investors are advised to closely monitor current indexes and indicators, while exercising caution with leverage and other risk-enhancing factors.
