Altcoins continue to weaken. What’s the reason?

The cryptocurrency market continues to fluctuate, and BTC’s dominance has grown to about 60%, close to a 4-year-high. Meanwhile, Ethereum and other altcoins show weak dynamics. The alts market was hit hard by scam associated with the LIBRA token and Argentine President Javier Millais.

Bitcoin is holding steady in the middle of the trading range, and implied volatilityA measure of expected market volatility in an asset's price that is calculated based on option prices. It reflects the extent to which the market predicts future price fluctuations, even if the actual volatility of the asset is currently low or high. continues to decline. This is not surprising, as the 7-day realized volatility fell to 36v. The lack of significant cryptocurrency catalysts makes the market more responsive to macroeconomic factors, especially given maintaining the correlation between BTC and stock markets.

Interestingly, despite macroeconomic uncertainty (tariffs, debt ceiling, inflation, etc.) and Donald Trump’s political unpredictability, the implicit volatility of cryptocurrencies and the VIXVolatility index that reflects market expectations for fluctuations in the S&P 500 index over the next 30 days remain low. Bitcoin has generally remained resilient to the latest macroeconomic data, and open interest (OI) has not recovered since the end of January contracts. This indicates that the cryptocurrency options market is waiting for specific policy changes, not just general pro-cryptocurrency statements.

The crypto market remains in limbo as to whether to buy options even at the current low volatility levels, which are reminiscent of the situation in the second or third quarter of last year when BTC could not break out of a multi-month range. Instead, most of the activity is focused on short-term volatility sellingTraders sell options or other derivatives to profit from low volatility. or range tradingBuy an asset at the lower boundaries of a price range (support) and sell at the upper boundaries (resistance)..

Since most traders use these strategies, it means that investors do not expect a strong trend (neither up nor down); volatility remains low and no one wants to spend money on long-term bets on a strong movement; capital does not flow from bitcoin to riskier assets, so its dominance is growing.

As we wrote earlier, the CMC altcoin season index must reach 75+ to start a full-fledged altcoin season. As of February 17, it stands at 39 (i.e., it has been falling for a few days).

Source: QCP group