Altcoins rally, Bitcoin stalls – What BTC traders should know!

Key Takeaways

A fractal pattern in the past day suggests that Bitcoin could decline in value, while altcoins take center stage. Liquidity is shifting as inflows continue to move in favor of altcoins in the market.

Bitcoin [BTC] could be taking a step back in its rally as investors appear to be diverting liquidity into altcoins.

However, Bitcoin’s performance in the past day has remained relatively stable, with no major gains as the asset held at 0.31%. In contrast, several altcoins have attracted investor attention, recording double-digit percentage gains.

Warning signs surface

The liquidity shift was initially triggered by a growing divergence: altcoin Open Interest (OI) surged while Bitcoin’s price stagnated.

Historically, such divergences have triggered notable declines in Bitcoin while providing a runway for altcoins to stage strong upward moves.

Source: TradingView

The last clear instance of this was between the 5th of December and the 28th of January, when Bitcoin suffered a 30% pullback while altcoins rallied sharply.

At the time of writing, Bitcoin’s OI has remained flat, while that of altcoins has climbed to a new high of $61.60 billion, implying a similar shift is underway.

The Altcoin Season Index has also gained momentum, currently reading 61, indicating that altcoins are leading Bitcoin in market capacity, according to CoinMarketCap.

This recent rally has been closely linked to tokens such as MYX Finance [MYX] and MemeCore [M], which have attracted significant inflows with staggering monthly gains of 968% and 327%, respectively, at press time.

Chart movements show momentum

An analysis of the altcoin chart (excluding the top 10 altcoins) against Bitcoin shows building momentum.

At the time of writing, it has recorded four consecutive bullish candlesticks, signaling stronger liquidity inflows compared to Bitcoin.

Source: TradingView

Notably, the chart is trading within a bullish pattern known to precede rallies. However, it has tested resistance levels that blocked altcoin rallies on the 21st of July, 13th of August, and the 9th of September.

A breakout from this pattern could spark significant rallies for altcoins in the coming trading sessions.

Bitcoin performance amidst risk

Despite altcoins attracting fresh liquidity, overall market sentiment remains tilted to the bullish side.

Spot Exchange Netflow data shows that Bitcoin, even with declining dominance, saw a massive inflow of over $81 million from spot traders.

Such inflows often imply that investors are moving assets into private wallets, reflecting a long-term optimistic outlook.

Source: CoinGlass

Additionally, the Binary CDD (Coin Days Destroyed) metric dropped to zero at the time of analysis, signaling that long-term holders are barely moving their assets.

Historically, when this investor group remains calm and sell pressure is minimal, the asset tends to either hold its ground or continue rising. 

This pattern suggests that while altcoins are attracting increased liquidity, Bitcoin still retains a meaningful share of investor confidence.

Overall, the trend points to a temporary redistribution of liquidity across the market, rather than a full-scale capital rotation away from Bitcoin.