An analysis said the altcoin market has entered its worst phase since the FTX crisis. Still, some experts see the pullback as a structural squeeze driven by shrinking liquidity and risk aversion rather than forced liquidations, and say it could instead be a sign of the next upswing cycle.
On March 4, blockchain media outlet Cryptopolitan cited on-chain analytics firm CryptoQuant as saying that more than 40 percent of altcoins are trading near record lows. It called the weakness more widespread than the downturn seen after the FTX collapse. CryptoQuant analyst DarkFrost said, “This decline is the largest in the current cycle,” adding, “It shows altcoins are still under strong pressure.”
Another analysis said this pullback differs from the 2022 FTX crisis. At the time, panic selling and large-scale forced liquidations fuelled volatility, while now a lack of liquidity and weaker risk appetite are weighing on prices without clear cascading liquidations.
James Butterfill (제임스 버터필), head of research at digital asset manager CoinShares, said, “Unlike in the past, this price move shows a relatively constructive correction without large-scale forced liquidations.” He said it “suggests positioning has been cleared out to a significant extent despite rising yields and geopolitical tensions.”
It also supports that reading that money is leaving altcoins broadly and shifting to large assets such as bitcoin (BTC), ether (ETH) and solana (SOL). Coinbase, the largest U.S. cryptocurrency exchange, is also showing a trend of screening listed assets and concentrating liquidity in a small number of tokens. That is likely to add downward pressure to smaller-cap altcoins.
Some analysts, however, interpret the current stretch as the starting point of a long-term bull market. One market commentator said, “The next big move could start in this range,” citing six years of market data. Others also caution that the next direction depends on whether a triangle pattern now forming breaks upward or downward.
A key condition for an altcoin rebound is further gains in bitcoin. Cryptocurrency analyst Michaël van de Poppe (미카엘 반 데 포페) said if bitcoin clearly rises above $65,000, liquidity rotation could spread funds into altcoins. He added that a true “altcoin season” would require money to move beyond bitcoin into mid- and small-cap tokens.
Macroeconomic indicators are also a factor. Some market participants say if the purchasing managers’ index (PMI) rises above 50 and confirms an expansion signal, risk appetite could recover and ignite an altcoin rally. In general, a PMI above 50 signals expansion and below 50 signals contraction.
Global markets, meanwhile, are seeing rising volatility amid heightened geopolitical tensions. As of March 3, gold fell 4.3 percent, while silver and platinum dropped 7.5 percent and 11.3 percent, respectively. Bitcoin, by contrast, reclaimed the $70,000 level and showed a short-term uptrend.
