Bitcoin Soars, Altcoins Sink: Market Madness Unfolds

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As Bitcoin continues to attract more liquidity and patient investors, altcoins are struggling to stay afloat.

Recent market trends have highlighted a widening gap between the two, with altcoins facing significant pressure.

A Divided Market

Bitcoin investors experienced some wild price swings last week, as it briefly dropped to $91,300 before rebounding to $102,000. The leading crypto asset has now settled near $96,000. This volatility was caused by President Trump’s tariff threats against Canada, Mexico, and China, as well as a strong US dollar.

Despite this short-term volatility, Glassnode found that the influx of liquidity into Bitcoin has surged, with significant capital flows helping to counterbalance the challenges of its expanding market. Furthermore, a more resilient and long-term-focused investor base has played an important role in maintaining Bitcoin’s price stability, even as broader macroeconomic conditions remain uncertain.

The altcoin market, on the other hand, has faced heavy selling pressure as many assets struggle with adoption and product-market fit. This challenging environment has led to a broad decline in token prices, with every altcoin sector underperforming Bitcoin in recent weeks.

In fact, the altcoin market has lost $234 billion in value over the last two weeks, as per Glassnode’s data, with only a few instances of larger declines. This sharp drawdown indicates a major capitulation event that has reinforced the idea that the sector is still in a bear market, while Bitcoin’s current price trajectory is indicative of an emerging divide between BTC and other digital assets.

In percentage terms, the altcoin drawdown remains notable, with only 41 out of 1,662 trading days seeing a larger decline. However, it aligns more closely with previous 2024 downturns and is less severe than the May 2021 Great Miner Migration, or the LUNA/UST and 3AC collapses in late 2022.

Big Capitulation, But Still Normal

During volatility over the week, around $520 million in losses were locked in as Bitcoin dropped to $93,000. Interestingly, this marked one of the largest capitulation events of this bull cycle – second only to the $1.3 billion loss back in August 2023.

When measured in BTC terms to account for market size, the scale of these losses appears more “typical.” The magnitude is in line with previous capitulation events seen in 2024, which means that this remains within the expected range for a bull market correction or consolidation phase.

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2025-02-12 15:12