The latest figures from on-chain analytics firm CryptoQuant show that more than a third of altcoins are near all-time lows, suggesting a sharper decline than the post-FTX drop.
On X, the firm’s analyst, DarkFrost, said that it is the biggest pullback altcoins have seen in the current cycle. He commented, “This metric shows how much altcoins are still under pressure. In fact, this represents the largest regression of altcoins observed during this cycle.”
Market observers say the current downturn differs from the FTX-era crash, which was largely driven by forced liquidations and panic selling. This time, there is little evidence of widespread distress. Instead, the weakness appears linked to thin liquidity and reduced risk appetite.
Some analysts believe the retraction signals an upcoming bullish cycle
Close to 40% of altcoins are now dangerously close to their all-time lows, worse than even post-FTX, according to CryptoQuant. One X commentator, comparing the FTX-era downturn with current market conditions, said a lot of the volatility during the FTX-era downturn was panic-induced liquidations, and that’s not a dynamic that’s quite so evident now.
But he noted that, though there weren’t many forced sellers at the moment, this altcoin downturn could be linked to low liquidity, reduced risk exposure, and a shift of cash into the leading cryptocurrencies BTC and ETH.
However, another X user suggested that this correction could be the start of a bullish cycle. He remarked, “This range is where the next big move starts. 6 years confirms it. I’m positioning for it.” An opinion, some seemed to agree with, although one commentator emphasized that the market’s direction will rely on a breakout from the triangle formation.
At the same time, Crypto & Bitcoin Enthusiast Michaël van de Poppe implied that Bitcoin trading above $65,000 is laying a solid foundation for a rally, with a breakout likely to benefit other tokens through liquidity rotation. However, analysts say the next altcoin season will depend on whether funds rotate into altcoins or remain concentrated in BTC.
Some analysts are waiting for PMI to soar above 50 to spark an altcoin rally
Meanwhile, market investors and analysts are curious whether a Purchasing Managers Index (PMI) reading above 50 could ignite the next altcoin rally.
Normally, values above 50 indicate economic growth, while those below 50 indicate a contraction. Altcoin prices are generally highly dependent on liquidity and market risk appetite. Traditionally, the assets’ upswings have been characterized by growth phases during the early to mid expansion phases, supported by increased liquidity. Today, however, the world is facing enormous geopolitical tensions, and some enterprises are already paying the price.
With the new Middle East war breaking out, a number of stocks and precious metals have already shaved off some of their gains. As of March 3, Gold was down 4.3%, silver down 7.5%, and platinum down 11.3%. However, major crypto assets are still holding steady.
For instance, Bitcoin is showing some relative resilience, currently at $68,000 — down slightly over the past day but recovering from intraday lows by over 2%. Ether and Solana have also dipped over the last day, but have recovered well from their worst levels.
Speaking on the market conditions, James Butterfill, head of research at CoinShares, even commented, “This time, the price development was constructive, bitcoin gained despite the increasing instability … This divergence is significant. The absence of significant liquidations despite rising yields and geopolitical tensions suggests that positioning is adjusted compared to previous episodes.”
Overall, at the moment, blockchain data shows that traders are moving towards a small number of higher-quality, story-driven tokens, such as BTC, ETH, and SOL. Exchanges like Coinbase also concentrate liquidity in a small number of listed assets, putting even more pressure on smaller-cap tokens.
Source: https://www.cryptopolitan.com/nearly-40-of-altcoins-stuck-near-lows/
