Despite Bitcoin (BTC) dropping 10% in October, Capriole Investments' altcoin speculation index remains stable at around 25%, indicating that speculative activity in the altcoin market is holding steady rather than declining alongside BTC. This relative stability may suggest that market participants are in the early stages of re-entering, as investors selectively turn to higher-risk crypto assets despite facing macroeconomic uncertainties.
Key Points:
Even though BTC fell to $100,000 in October, altcoin speculation activity remains stable.
Breadth indicators show limited participation, but selected altcoins exhibit recovery potential.
The overall altcoin market cap is only 17% lower than its historical peak, demonstrating unexpected resilience.
The altcoin speculation index tracks the proportion of speculative altcoins (those without established on-chain or utility value metrics) in the total market cap of cryptocurrencies.
Historically, low readings of this index often coincide with market bottoms when speculation wanes and value accumulation begins. Currently, the index at 25.4% is still far below euphoric levels (typically above 60%), indicating that there is still room for risk appetite to expand before market conditions become overheated.
At the same time, Capriole Investments' CryptoBreadth50 and CryptoBreadth200 stand at 11.2% and 6.3%, respectively, indicating that only a few major cryptocurrencies are currently trading above their key 50-day and 200-day moving averages. This limited market participation typically reflects ongoing risk-averse sentiment, but if BTC begins to lead the market higher, it could also be a precursor to a broader recovery.
Notably, the TOTAL3 market cap (the total market cap excluding BTC and ETH) is only 17% lower than its historical peak, highlighting the relative resilience exhibited by the entire altcoin market.
Overall, despite the low speculative sentiment and weak market breadth, the combination of stable market sentiment and resilient altcoin performance may suggest that smart money is quietly positioning for the next phase of market expansion.
BTC's market dominance has recently declined, dropping over 7% in the past six months to 57.8%, reigniting discussions about whether the altcoin season is approaching.
Cryptocurrency analyst Matthew Hyland points out that the continued decline in BTC's market share reflects waning momentum, describing the recent rebound as a "dead cat bounce" in a downtrend.
Hyland further states that the volatility in BTC prices may be a "manipulation" by traditional financial institutions positioning for the next significant phase.
Nevertheless, broader indicators such as the altcoin season index remain at a dismal level of 41/100, still within the "Bitcoin season" zone. The analyst emphasizes that the next altcoin cycle may not replicate the speculative frenzy of 2017 or 2021.
However, Kamal Mokeddem of Finality Capital believes that the lack of a broad altcoin rally does not signify a downturn but rather a sign of maturity. Mokeddem emphasizes that altcoins are evolving from "speculative chips into foundational business primitives," driving Web3 adoption across the industry.
Related: U.S. Government Shutdown Ends, Institutional Buying Sparks Hopes for Altcoin ETF "Gate" Opening
This article does not constitute any investment advice or recommendation. All investment and trading activities carry risks, and readers should conduct their own research before making decisions.
Original article: “Altcoin Index Metric Hints at Early Revival: Is the Next Rally Close?”
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