Seller Fatigue? Altcoins Open Interest down 55% from March ATH

Bitcoin open interest is still relatively high, but analysts can’t say the same for altcoins. Total open interest for alternatives listed on major crypto exchanges, excluding ether (ETH), has fallen 55% from the all-time high (ATH) seen on March 25.

The current aggregate value of these crypto assets is $8.75 billion, indicating that they have reached a point of seller exhaustion. According to analysts at crypto exchange Bitfinex, this is part of a significant shift in the altcoin’s relative strength against Bitcoin.

Altcoin sellers are exhausted

The latest Bitfinex Alpha report signaled a change in market dynamics: investors are not moving into Bitcoin for safety amid volatility, but rather seeing potential value or receiving positive signals from the altcoin market.

“Typically, during market downturns, traders tend to liquidate their altcoin holdings for either Bitcoin or fiat, leading to an increase in Bitcoin dominance and a corresponding decrease in altcoin dominance. This behavior is based on the perceived safety of Bitcoin as a more stable asset compared to altcoins during volatile periods,” the analysts explained.

Bitfinex said the latest change in altcoin market dynamics could be attributed to the fact that much of the recent sell-off has been driven by exchange-traded fund (ETF) exits and spot selling. Many altcoins have already fallen around 80% of their ATHs, so sellers are likely to experience fatigue.

Bitcoin’s dominance declines

Since early 2023, altcoins, with the exception of a few outliers, have consistently outperformed bitcoin (BTC). Using ETH as a proxy for all altcoins, Bitfinex revealed that the ETH/BTC ratio has been in a downtrend since late 2022 and is currently below its 365-day simple moving average: the ratio is it sits below 0.042, its lowest level since April 2021.

However, seller exhaustion and reduced open interest amid the recent BTC selloff have increased the possibility of altcoins outperforming BTC during market rallies. Bitfinex said this event could mark a major regime change in the crypto space, setting the market up for a very bullish push in the fourth quarter.

With altcoins showing resistance to declines, Bitcoin dominance is likely to approach a local top. After the financial market crash at the beginning of August, the metric reached 57.7%, its highest value since March 2021, but last week’s correction saw the number decrease by 1, 3% Conversely, the dominance of other cryptocurrencies, excluding the top ten assets by market capitalization, increased by 4.4%.

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