- The notable reduction in capital inflows into the cryptocurrency market contributed to the delay in the other season.
- Tokens like BNB and AAVE expected to maintain their bullish outlook despite the setback
The capitalization of the broader cryptocurrency market has declined recently, falling 2.06% to $3.33 trillion. However, a broader analysis revealed a steeper decline of 18.33%, from $3.7 trillion in November to $3.28 trillion on December 24.
Over the past 24 hours, the market decline coincided with a 3.3% increase in trading volume, to $121.84 billion. This indicates that traders’ selling pressure was supported by real momentum.
Such downward market trends often influence the performance of altcoins, especially since these tokens generally follow the broader market direction. In fact, according to AMBCrypto’s analysis, the decline in capital inflows has played a vital role in the current market downturn.
Liquidity flows are experiencing a significant slowdown
According to Glassnode, there has been a notable decline in capital inflows into the cryptocurrency market – a sign of a lack of active investment.
Data from the measure of net realized value position change in the overall market revealed that capital inflows, measured in USD, fell from $134 billion on December 10 to $100 billion at the time of writing .
Source:
Such a slowdown is usually a sign that the market lacks bullish sentiment for the majority of cryptocurrencies. Instead, investors appear to prefer holding stable assets rather than purchasing volatile tokens. This would reinforce bearish market sentiment and increase the likelihood of sustained declines.
Despite the overall decline in capital inflows, some tokens are expected to maintain their bullish momentum and potentially outperform the market as a whole.
BNB set to set new all-time high
BNB remains one of the best performing cryptocurrency assets of 2024, hitting two all-time highs during the year.
Following its previous high of $691.77 in 2021, BNB surpassed this level in June 2024, reaching $721.80 on the charts. In December 2024, it set another record, trading at $793.86.
Source: Commercial View
At the time of writing, BNB appeared to be in an accumulation phase, as indicated by its chart patterns. If the token breaks out of this phase, it could trigger another rally, with a strong possibility of surpassing its previous high and aiming for levels above $800.
AAVE remains structurally bullish
On the price chart, AAVE maintained its position in the bullish zone. After months of market consolidation, the asset broke out in January, rebounding 332.78% to $399.85 – a level last seen in 2021.
AAVE hit a new all-time high for its total value locked (TVL) on December 17, peaking at $23.19 billion. However, its TVL has since recorded a slight decline to $20.63 billion. This slight decline suggests that AAVE remains fundamentally bullish, especially as activity on its protocol continues to grow.
Source: DeFiLlama
If TVL stabilizes or increases, AAVE price is likely to continue its upward momentum. Especially since it is central to the management of the platform’s operations.
A key requirement for altcoin season
A major condition for another season’s rally to materialize is a decline in Bitcoin dominance, a metric that compares Bitcoin’s performance to that of other altcoins in the market. When Bitcoin dominance is high, it indicates that Bitcoin is outperforming most altcoins. Conversely, lower dominance suggests that altcoins are performing better.
At the time of writing, CoinMarketCap reported that Bitcoin dominance had slightly decreased by 0.18%, falling to 56.94%.
Since Bitcoin dominance remains relatively high, the alt season could be delayed. At least until a larger drop occurs, potentially bringing it below 50%.
