Cryptocurrency market maker Wintermute has published a comprehensive report shedding light on the current state of the market and altcoin dynamics.
“Bitcoin and Ethereum Need to Take the Lead”
According to the report, while positioning has largely reset, a broad-based rally on the altcoin side will require majors like Bitcoin and Ethereum to reclaim the lead. The firm also believes that upcoming regulatory and political headlines in the US will be the next volatility trigger.
Wintermute noted a marked shift in the market tone this week, noting that “the dust has largely settled” following the harsh liquidations in October, with positions easing and a more balanced tone replacing the fragile tone.
The report emphasizes that digital assets still lag behind other risk assets, noting that positive headlines are supporting risk appetite, albeit to a limited extent. Trump’s $2,000 “stimulus” proposal, floated over the weekend, and expectations that the US government shutdown may be ending have reopened investors to selective risk-taking. Despite this, there hasn’t yet been any significant momentum in crypto inflows.
Bitcoin held between $105,000 and $107,000 throughout the week, while Ethereum hovered around $3,700. Despite outflows from ETFs, both major assets remained resilient. Altcoins, on the other hand, started the week with a rally but remained extremely volatile. Wintermute noted that only a few altcoins (FIL, AR, and a few others) showed strong performance, demonstrating the limited market breathing space.
On the macro side, the picture is supportive: interest rate cuts are progressing, the balance sheet tightening (QT) is complete, and global easing efforts are underway. The rapid decline in the SOFR rate is a reflection of this. However, crypto is responding less effectively than other risk assets. The speculative layer has thinned, rallies are short-lived, and capital remains heavily concentrated in large assets.
Historical data shows that altcoin rallies typically begin when Bitcoin is trading near all-time highs. BTC is currently 16% below its peak. In this region, the probability of Bitcoin outperforming altcoins is 54%, rising to 58% as the price approaches $100,000. According to Wintermute, this explains why last week’s surges for “dinosaur coins” like FIL, ICP, and FET appeared so fragile and quickly fizzled out.
The report notes, however, that not all altcoins are completely lifeless. Decreasing regulatory uncertainty and expectations that the US domestic market could reopen have positioned some strong catalysts, such as HYPE, ENA, and UNI, better than the majors. However, the broader altcoin market still behaves like an options market: short-lived momentum spikes, trends that don’t last, and moves that don’t last long without directional confirmation from BTC.
Wintermute describes the overall picture as a “reversal phase.” Positioning has cleared, sentiment has improved, and the market feels more balanced after a long period of volatility. The firm argues that “the next round of leadership should come from Bitcoin and Ethereum,” and that altcoins can only transition to a broad-based rally once BTC approaches its peaks.
*This is not investment advice.