In the early morning of December 10, the cryptocurrency market once again experienced a sharp decline, especially the short-term plunge of altcoins and meme coins, which caused market panic. The prices of a large number of altcoins fell sharply, which can be described as "blood flowing into a river", and the number of liquidations was close to 600,000. This number far exceeds the 100,000 liquidations during the "3.12 Crash" in 2020.
StarEx exchange analysts believe that the rapid rise and fall of altcoins is mainly due to leveraged funds. With the rapid decline of funding rates, it is now close to the bear market level, indicating that leveraged transactions have been liquidated on a large scale.
The altcoin market itself is also facing a series of fundamental problems. For example, many altcoins are dominated by venture capital (VC) institutions, and the continued lifting of restrictions by these institutions has caused significant selling pressure on the market. The ecological development of altcoins has tended to stagnate, and the overall market value is large, which makes further substantial increases lack of momentum. These problems have caused the rebound of altcoins to come quickly, but also go away quickly.
In sharp contrast to altcoins, Bitcoin and Ethereum, backed by US ETFs, have performed relatively well. Data shows that Bitcoin ETFs have achieved net inflows for 10 consecutive days, with a total amount of more than $4 billion, of which 88% came from global asset management giant BlackRock. Ethereum ETFs also performed well, with net inflows for 13 consecutive days, with a total amount of more than $2 billion, of which 64% also came from BlackRock.
StarEx exchange analysts believe that institutional investors' confidence in mainstream crypto assets is still steadily increasing. Driven by the continued growth of ETF funds, the decline of Bitcoin and Ethereum is significantly smaller than that of altcoins, and the capital inflow behind them provides effective support for the market.
A key question that the market is concerned about is whether there will be a trend similar to that in March this year, where Bitcoin fluctuates within a larger range while altcoins enter a negative trend. StarEx exchange analysts believe that this is more likely based on the current market performance.
As the "value anchor" of the market, Bitcoin's downside has been greatly compressed, driven by the strategic reserve needs of large institutions, large capital and even some national governments. Unless there is a "black swan" event in the US macro-economy, such as a major economic recession or an unexpected shift in monetary policy, the possibility of a sharp decline in Bitcoin is not high. In the coming period, Bitcoin will most likely fluctuate in the range of $80,000 to $110,000 until the market usher in a new driving event.
In contrast, altcoins, especially some "ancient" altcoins, may continue to fall after rebounding. The currency that lacks ecological development and technological explosion potential is losing its appeal to ordinary investors and it is difficult to form a sufficient wealth effect. In the short term, the rebound of altcoins may be more of a technical repair after market liquidation. If there is no new ecological application or capital injection, the strength and sustainability of the rebound will be limited.
StarEx exchange analysts believe that the best trading strategy for altcoins is to withdraw immediately after a rebound. The rebound after each round of market crash can usually reach 20%-30%, which is a relatively obvious profit margin. The meme coin sector often becomes a hot spot when market sentiment warms up. If retail funds flow in again, meme coins may usher in another wave of short-term speculation. Ecological tokens like SOL may still perform well with strong ecological support.
StarEx exchange analysts believe that despite the current market volatility, it also provides investors with an opportunity to screen high-quality assets. For Bitcoin, its ETF net inflow and institutional layout are laying the foundation for future increases. The altcoin market needs to further observe the ecological development and capital flow.
