Short-Term Thinking Stalls Altcoin Breakouts, Warns Syncracy CEO

The altcoin market faces stagnation as traders prioritize short-term gains over long-term value, according to Syncracy Capital co-founder Daniel Cheung.

Cheung highlighted on Dec. 28 that heightened volatility stems from a shift in trading behavior, with many adopting high-frequency strategies to time entries and exits.

The total cryptocurrency market cap excluding Bitcoin (BTC) and Ethereum (ETH), known as TOTAL3, sits at $965.15 billion, according to TradingView data. It has risen 92.13% year-to-date but remains 16% below its 2021 all-time high of $1.13 trillion.

Traders Monitor Choppy Market

Pseudonymous trader Daan Crypto Trades identified the $840 billion to $1.1 trillion range as a critical zone. “As long as this trades between ~$840B and ~$1.1T, I think it will be choppy,” Daan said in a Dec. 28 post on X. A drop below $800 billion could signal increased caution.

The TOTAL3 cap needs to breach its 2021 high to trigger the “euphoria” phase, Daan noted. This phase, characterized by strong rallies and price discovery, has yet to materialize.

Bitcoin dominance surged to nearly 60% as the leading cryptocurrency stalled below $96,000 in late December. This trend has shifted focus to altcoins, which traders now see as offering better risk-reward profiles.

“Altcoins, at this juncture, offer a far more optimal R/R [Risk/Reward] profile than Bitcoin,” pseudonymous trader Dyme wrote on Dec. 27. Dyme suggested the accumulation phase for Bitcoin may be over for the next 1.5 years, urging traders to shift their strategies.

Top Pre-Altcoin Season Altcoin Gainers

CoinMarketCap data reveals notable altcoin performers over the past week. Bitget Token (BGB) gained 84.48%, Virtuals Protocol (VIRTUAL) rose 48%, and Pudgy Penguins (PENGU) climbed 32.63%. These gains suggest that some traders are already rotating funds into altcoins in anticipation of a breakout.

However, Cheung emphasized that the lack of swift breakouts compared to prior market cycles is linked to traders’ short-term outlooks.

“Everyone decided they were George Soros all of a sudden this cycle,” he said, referencing the famed investor’s high-frequency trading strategies.

Roadblocks to Altcoin Euphoria

While altcoin activity rises, the market cap remains capped. Breaching the $1.13 trillion threshold is essential for altcoins to enter a price discovery phase. Until then, the market is likely to see sideways movement.

Analysts agree the shift in trading patterns reflects broader changes in market sentiment. The focus on hourly charts and leverage has reduced the long-term holding mentality that fueled previous bull markets.

For now, traders eye altcoins with optimism but remain cautious of broader market conditions. Whether this short-term focus will continue to stall altcoin growth remains to be seen.

The Altcoin Season Index dropped two points to 45 on Dec. 29, per CoinMarketCap. This means the market remains in Bitcoin Season, where Bitcoin outperforms most altcoins.

The index tracks the top 100 cryptocurrencies (excluding stablecoins) over 90 days, signaling Altcoin Season only when 75% outperform Bitcoin. The current score highlights Bitcoin’s dominance but hints at growing altcoin momentum.

This daily updated metric helps investors monitor market shifts and assess emerging trends in the crypto space.

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