Altcoins Lose $350B Amid Market Fragility
Key Takeaways
- Altcoins have lost approximately USD 350 billion in market capitalization since December 2024.
- This represents a decline of over 40% – from USD 1 trillion to around USD 583 billion.
- Main reasons: liquidity shortages, weak capital inflows, and political uncertainty due to U.S. tariffs.
- Short-term recovery in some coins like Solana, Chainlink, and Cardano – but no sustained trend reversal.
- The market remains vulnerable as investors shift capital into Bitcoin or stablecoins.
What’s Behind the Altcoin Crash?
Since peaking at around USD 1 trillion in December 2024, the altcoin market has lost over USD 350 billion. The current level stands at approximately USD 583 billion. This decline affects nearly all altcoins – regardless of sector or use case.
Analytics platform Glassnode shows a clear trend reversal in its charts. Particularly notable is the growing gap between the 7-day and 30-day simple moving averages (SMA). This indicates a disrupted market pattern. The so-called “altseason” – a phase in which altcoins outperform Bitcoin – appears to be over for now.
Why Altcoins Are Under Particular Pressure
Altcoins are considered a riskier asset class compared to established cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH). During periods of heightened uncertainty – such as the current situation caused by U.S. trade policy under Donald Trump – investors tend to pull out of these high-risk assets first.
The announcement of new trade tariffs by the United States has shaken confidence in riskier markets. Altcoin investors are particularly sensitive to such signals. Capital is either being rotated into Bitcoin or parked in stablecoins – digital currencies pegged to the U.S. dollar.
Brief Recovery – But No Trend Reversal
In the last 12 to 18 hours, there has been a minor counter-movement. Coins like Chainlink (LINK), Solana (SOL), and Cardano (ADA) have seen slight gains. However, this recovery is mainly driven by technical factors – such as oversold price levels – rather than new capital inflows.
Ethereum has shown little movement, indicating a lack of leadership among major coins. Without clear market leaders, the recovery remains fragile. Volatility is still high, and trading volume is insufficient to restore lasting investor confidence.
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Structural Weaknesses Persist
Many altcoins continue to show negative MVRV ratios. This metric (Market Value to Realized Value) indicates whether investors are in profit or at a loss. Negative values suggest that many investors are currently holding losses – a reason for their reluctance to reinvest.
The Ethereum to Bitcoin ratio (ETH/BTC) also remains weak. Ethereum is losing ground to Bitcoin, which shows that capital is flowing into safer crypto assets. Without a reversal of this trend, the altcoin market remains vulnerable and reactive.
Our Assessment
The altcoin market is in a challenging phase. The price losses since December are significant and reflect a disrupted market environment. Political uncertainty, weak liquidity, and a lack of capital inflows are weighing on performance.
Short-term recoveries are possible, but without sustainable fundamentals, the risk of further declines remains high. Those currently invested in altcoins – or looking to enter – should watch for clear signals: rising trading volumes, rotation from Bitcoin into altcoins, and positive MVRV values.
Until then: caution and a selective approach are advised.
Sources
- Glassnode
- TradingView
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