The cryptocurrency market has seen remarkable gains, with Hedera (+99.31%), IOTA (+79.61%), and JasmyCoin (+72.47%) leading the charge since November 1, according to CoinMarketCap data. As Bitcoin dominance falls to 55.11% (a 7.88% decline in the past month), speculation is growing about a potential altcoin season extending into early 2025.

top altcoin gains and the decline in Bitcoin dominance since November 1. ​
Top altcoin gains and the decline in Bitcoin dominance since November 1 ​

1. Altcoin Rally

  • Analysts like MilkyBull Crypto and Sensei anticipate continued altcoin gains driven by decreasing Bitcoin dominance and robust momentum.
  • However, high funding rates in perpetual futures markets (ranging from 48% to 72% annually per CoinGlass) could pose risks. Leverage costs are manageable in uptrends but could lead to forced liquidations if markets stabilize or correct.

2. Leverage and Market Liquidity

  • Felix Hartmann (Hartmann Capital) warns that excessive leverage and declining spot trading volumes mirror conditions from late 2021, when rapid corrections occurred after rallies in coins like Solana and XRP.
  • Funding rates surpassing 100% annually would be a red flag, potentially signaling a precarious market position.

3. Bitcoin Milestone at $100K

  • Bitcoin’s climb above $100,000 has drawn mixed reactions. Some see it as a bullish signal, while others, including Sergei Gorev (YouHodler), caution against celebrating prematurely.
  • Gorev highlights Bitcoin’s correlation with the S&P 500 and rising USD exchange rates as factors that could limit sustainability. Round-number milestones like $100,000 often trigger heightened volatility.

4. Historical and Technical Concerns

  • Divergences in technical indicators, coupled with broader macroeconomic uncertainties, suggest caution.
  • Market dynamics, such as rising funding rates, declining trading volumes, and reliance on leveraged positions, echo patterns seen before previous downturns.

Outlook for Traders and Investors:

Optimistic Scenario:

  • Sustained Bull Run: If Bitcoin stabilizes and funding rates remain manageable, the altcoin market could continue its upward momentum. Key coins like Hedera, IOTA, and JasmyCoin may see further growth as traders rotate into promising projects.

Cautious Scenario:

  • Pullback Risks: Elevated leverage costs and declining spot volumes could trigger a correction, particularly if Bitcoin faces resistance or macroeconomic pressures increase. Historical trends suggest caution after significant rallies.

Factors to Watch:

  1. Funding Rates: Rising costs could lead to liquidation events.
  2. Bitcoin Dominance: A rebound in dominance might stall the altcoin rally.
  3. Macroeconomic Conditions: Global financial trends and central bank policies could impact crypto sentiment.
  4. Spot Trading Volume: A sustained decline could signal weakening market confidence.

The cryptocurrency market stands at a critical juncture, balancing optimism over altcoin potential with the risks of heightened volatility and structural fragility. Traders and investors should stay vigilant, leveraging technical and fundamental analysis to navigate the uncertain terrain.