The massive November dump of last year was immediately preceded by an equally surging dominance in altcoin trade volume.
The dominance of altcoins’ trading volume has surged to 50% and is looking to rise above the level, sparking worries amongst analysts. The pattern is mainly associated with a looming market-wide slump. “This is VERY CONCERNING,” said CryptoQuant verified author and founder of Diveonchain, JA Maartun, who recently highlighted the alarming metric as he warned of an impending dump.
Altcoin trading dominance is 50%. This is VERY CONCERNING 🚩
— Maartunn (@JA_Maartun) January 4, 2023
Maartun shared a chart from the crypto chart providing service Diveonchain, using it as support for his analysis. Data from the chart reveals past occasions where the dominance of altcoins’ trading volume surged to and above 50%. Most of the time, BTC’s price experienced a massive crash, and the rest of the markets followed.
The chart reveals that a rise in the dominance of altcoin trade volume immediately preceded the colossal dump experienced in November of last year. Maartun highlighted the alarming pattern on November 1 last year, a few days before the FTX-induced market crash. The dominance of altcoins’ trading volume had increased to 55%.
— Maartunn (@JA_Maartun) November 1, 2022
The CryptoQuant author also disclosed numerous warning signs relating to a rise in altcoins trade volume and a dominance of market sellers in the days leading to November 7. This time, he has cited an analysis by Material Scientist, an anonymous market watcher, who highlighted a recent sharp increase in optimistic sentiments before a rejection. According to him, the movement is alarming in a bearish market.
Besides Maartun, crypto behavior analytics platform Santiment recently drew public attention to a similar pattern. According to Santiment, the recently-engineered small rally devised by altcoins since January 1 has pumped investors’ attention into the market. This is evidenced in a rise in social mentions of terms such as “buy,” “buying,” “bottom,” and “bullish.”
🤞 This week's modest #crypto rally, particularly for #altcoins, has led to a spike in social media mentions of terms like #buy, #buying, #bottom, & #bullish. Historically, these positive terms are signs of euphoria & #FOMO. Tread carefully at this spot. https://t.co/QpQ6j5TviT pic.twitter.com/nxq0FYPbp0
— Santiment (@santimentfeed) January 5, 2023
According to Santiment, historical data reveals that a rise in these terms indicates growing FOMO as euphoria amongst investors increases. The platform advised investors to “tread carefully.” Meanwhile, PlanB, the Stock-to-Flow Model Creator, recently revealed that BTC is currently weak despite its modest gains, asking investors to remain patient.