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Stablecoin liquidity shaping altcoin markets amid Bitcoin rotation decline

Source Cryptopolitan

CryptoQuant CEO Ki Young Ju has attributed the surge in altcoin trading to increased stablecoin liquidity. In a post on X, Young Ju explained that most of the trading volume for altcoins is tied to stablecoins and fiat pairs.

According to him, rotation from Bitcoin no longer defines the alt season, a major departure from previous bull runs. According to Cryptoquant data, the aggregated trading volume for stablecoin pairs has reached peak levels this year, while the trading volume for Bitcoin pairs is down.

Young Ju said:

“Alt season is no longer defined by asset rotation from #Bitcoin. Stablecoin liquidity better explains the altcoin markets.”

His comments capture the significant difference between the current and previous bull markets. Historically, the alt season, which refers to when these tokens record a surge in value and outshine Bitcoin, usually happens due to investors rotating capital out of Bitcoin into other cryptocurrencies, the alternatives.

Stablecoin liquidity now defines altcoin markets better – CryptoQuant

However, this has not happened, leading many market observers to question why alternative cryptos have not entered their season. Young Ju now believes that investors need to pay attention to stablecoins liquidity instead of focusing on capital rotation out of Bitcoin.

Institutional interest in Bitcoin ends capital rotation to altcoins

Young Ju had previously explained why the altcoin season is delayed. According to him, institutional investors and spot exchange-traded funds (ETFs) are driving the current Bitcoin rally, and this group does not buy on exchanges nor do they care much for Bitcoin alternatives.

He said:

“Unlike crypto exchange users, institutional investors and ETF buyers have no intention of rotating their assets from Bitcoin to altcoins. Moreover, as they operate outside of crypto exchanges, asset rotation becomes inherently less feasible.”

The limited exposure of these institutional investors to altcoins or exchanges means that retail investors will likely be responsible for any alts season in this bull run.

The analyst said:

“For altcoins to reach a new all-time high market capitalization, they will require a significant influx of fresh capital to crypto exchanges. The altcoin market cap below its previous ATH indicates reduced fresh liquidity from new exchange users.”

Since retail is unlikely to drive any major Bitcoin rally in the future, altcoins would have to find other ways to attract liquidity apart from relying on the Bitcoin rotation.

Altcoin season might be here already

While questions remain about when the alts season will start, some analysts believe that it has already started with retail selectively picking its winners. Podcaster CryptoVizArt noted that it has already started and might have even peaked with Solana.

However, Young Ju did not agree fully with this opinion, noting that the altcoin season has started for some but not others.

“Altseason has started for a few major altcoins, but not for others, imo. The total altcoin market cap is still below its all-time high.”

Others also share this view. Crypto trader CryptoFeras noted that alt season usually happens toward the final stages of the bull cycle, and this is likely what will happen now, as is the case in every other bull cycle.

The analyst explained the reason for this, noting:

“Once BTC goes parabolic, media start pushing the narrative, a new wave of retail buyers will come, and as usual, they will never buy the “expensive BTC” they will be buying altcoins. that was always the case in all cycles.”

Still, one coin that is currently experiencing its season is Ripple (XRP). The token has been up over 20% in the last 24 hours, peaking at $2.491. It has leapfrogged Solana in terms of market cap. For a few hours today, it even became the third biggest crypto asset, temporarily taking USDT’s position behind Bitcoin and Ethereum.

Altcoin season — Altcoin market cap breakout suggests altseason is coming – Ash Crypto

Meanwhile, several other analysts believe alts season is not here yet and will happen in the next few months. Crypto trader Ash Crypto noted that the market cap breakout has finally happened, and the last time it did, alts market cap increased by 1000% in seven months.

A Step-By-Step System To Launching Your Web3 Career and Landing High-Paying Crypto Jobs in 90 Days.

Disclaimer: For information purposes only. Past performance is not indicative of future results.

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Bitcoin experienced a sharp decline this weekend, briefly erasing its 2025 gains and dipping below its year-opening value of $93,507. The cryptocurrency fell to a low of $93,029 on Sunday, representing a 25% drop from its all-time high in October. Although it has rebounded slightly to around $94,209, the pressures on the market remain significant. The downturn occurred despite the reopening of the U.S. government on Thursday, which many had hoped would provide essential support for crypto markets. This year initially appeared promising for cryptocurrencies, particularly after the inauguration of President Donald Trump, who has established the most pro-crypto administration thus far. However, ongoing political tensions—including Trump's tariff strategies and the recent government shutdown, lasting a historic 43 days—have contributed to several rapid price pullbacks for Bitcoin throughout the year. Market dynamics are also being influenced by Bitcoin whales—investors holding large amounts of Bitcoin—who have been offloading portions of their assets, consequently stalling price rallies even as positive regulatory developments emerge. Despite these sell-offs, analysts from Glassnode argue that this behavior aligns with typical patterns seen among long-term investors during the concluding stages of bull markets, suggesting it is not indicative of a mass exodus. Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses. Looking ahead, questions linger regarding the viability of the four-year cycle thesis, particularly given the increasing institutional support and regulatory frameworks now in place in the crypto landscape. Matt Hougan, chief investment officer at Bitwise, remains optimistic, suggesting a potential Bitcoin resurgence in 2026 driven by the “debasement trade” thesis and a broader trend toward increased adoption of stablecoins, tokenization, and decentralized finance. Hougan emphasized the soundness of the underlying fundamentals, pointing to a positive outlook for the sector in the longer term.

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