Following a recent market downturn triggered by a correction in Bitcoin’s value, altcoins are currently available at significantly reduced prices.
Some market analysts have been advocating for investors to take advantage of these low prices by “buying the dip.” However, Joao Wedson, an on-chain analyst and the founder of Alphractal, has issued a cautionary message to altcoin traders.
“Instead of investing in BTC or any altcoins, the most advisable strategy is to hold Stablecoins. The current performance trends and Bitcoin dominance are not in favor of altcoins. The opportune moment to exit was when BTC was trading above $106,000 − it’s time to divest completely!”
Wedson highlighted an increase in the preference for Bitcoin over altcoins, resulting in more capital flowing from altcoins to BTC and stablecoins.
Is Now a Good Time to Consider Investing in Altcoins?
As per Wedson’s analysis, BTC dominance has reached a low point above 54% and is expected to strengthen in the coming weeks and months, a situation that he described as potentially disastrous for altcoins.
He also pointed out that the already challenging scenario for altcoins was further compounded by the BTC dominance 90-day change showing a positive trend for the first time since the significant altcoin surge back in November.
In summary, the altcoin market may not experience a significant recovery from the recent downturn. Many of the leading and mid-cap altcoins witnessed declines ranging from 10% to 30% over the last week.
Notably, Ripple (XRP) and Cardano (ADA) were among the top altcoins that saw substantial drops. While XRP experienced a near 10% decline but managed to stay above $2, ADA slumped by 18% and fell below the $1 mark during the same period.
Interestingly, Ethereum (ETH) fared relatively better during the downturn, experiencing only a 6% drop and defending the $3,500 support level.
On the other hand, outliers like Hyperliquid (HYPE) and Pudgy Penguins (PENGU) recorded impressive gains of 40% and 425%, respectively.
Despite these outliers, the overall performance of the altcoin market further sluggish with the Altcoin Season Index hitting a monthly low of 50%.
Will the anticipated ‘Santa rally’ help uplift the prospects of altcoins? The possibility remains uncertain as the current data indicates a bearish trend. Nonetheless, a potential significant resurgence in 2025 could reignite investor interest in the altcoin market.