Matrixport Market Observation: Altcoin Market Heats Up, How to Steadily Position in the “Local Altcoin Season”?

The recent focus of the cryptocurrency market has shifted to some small-cap altcoins, which have recorded several times their increase in a short period, sparking heated discussions in the market. Taking a platform token MYX/USDT as an example, its price surged significantly within a few days, driven by news catalysts—announcing the launch of a token related to a former U.S. president, igniting market sentiment. At the same time, the contract open interest soared to a historical high, indicating a rapid influx of leveraged funds. Although such trends create a “prosperous scene,” they also hide risks: coins lacking spot liquidity can easily be controlled by a few large holders, and once the main players cash out, the market often reverses instantly, making ordinary investors easy targets for high-position buying.

Altcoin Trends Often Stem from Weakening BTC Momentum

Looking at historical cycles, collective euphoria in altcoins often occurs during the stagnation phase following a significant rise in BTC. When BTC momentum slows, funds begin to shift towards ETH, and the rising ETH/BTC exchange rate becomes a signal of increased risk appetite. Subsequently, some funds continue to flow into small and mid-cap coins, driving a broad rally in the sector, decreasing Bitcoin’s dominance, and increasing the market cap share of altcoins. Similar situations occurred at the end of 2017 and in the first half of 2021: after BTC peaked, ETH, DeFi sectors, and meme coins strengthened in succession, and market sentiment entered a “full-blown frenzy” mode.

Currently Closer to “Partial Rotation” Rather than a Full Altcoin Season

From a macro perspective, expectations for a Fed rate cut in September are rising, the U.S. dollar index is weakening, and the global liquidity environment is becoming more accommodative, providing external support for risk assets. On-chain capital flows also show positive signs, with stablecoins continuously flowing into exchanges, the ETH/BTC exchange rate rising, while BTC Dominance has fallen from a mid-year high of 65% to 59%, indicating that funds are partially spilling over. However, unlike past instances of widespread rallies, the current standout performances are still concentrated in a few sectors, such as AI, RWA, and GameFi. Most small-cap coins have not experienced systemic increases; a more reasonable definition is “partial altcoin season.”

Market sentiment is also in a warming phase but has not yet overheated. Implied volatility of options has rebounded, and the speculative activity of some altcoin contracts has increased, but the overall market has not entered an extreme frenzy. In other words, while investors chase returns, they still maintain a degree of rationality. In this state, although some coins may surge in the short term, it does not mean that the market has entered a full altcoin rally.

Seizing Opportunities While Paying Attention to Risk Management

Investors at this stage must not ignore opportunities, nor can they overlook risks. The high elasticity of altcoins means they may bring excess returns in the short term but can also accompany drawdowns exceeding 50%. A more prudent approach is to use BTC and ETH as core allocations to hedge overall volatility while allocating limited positions to altcoins supported by themes and liquidity. At the same time, clear profit-taking and stop-loss levels must be set, and hedging tools should be used to reduce exposure in extreme market conditions.

Matrixport Provides Strategic Tools to Support Rational Allocation

In the current environment of high volatility and gradual capital rotation, investors need to capture opportunities while controlling risks. Products like Daily Dual Currency can help investors earn interest or build positions at discounted prices during fluctuations; Accumulator is suitable for medium to long-term bullish investors to accumulate gradually; FCN offers opportunities to earn fixed coupon interest during range-bound fluctuations; while Decumulator allows large holders to reduce positions in an orderly manner at high levels, avoiding emotional trading.

Matrixport’s structured product system provides investors with a flexible toolbox of strategies, helping clients with different risk preferences to be well-prepared during the “altcoin season” brewing period: capturing profit opportunities from market volatility while reducing risks in extreme conditions through disciplined allocation, achieving more stable long-term returns.

Disclaimer: The market carries risks, and investments should be made cautiously. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided herein.