Stablecoin holders are increasingly shifting their focus to altcoins, fueling a “selective altseason,” according to CryptoQuant CEO Ki Young Ju.
Ju recently highlighted this shift in market behavior on X, stating, “altseason has begun, with no direct bitcoin-to-alt rotation, but stablecoin holders are favoring alts.” He noted that altcoin trading volume is now 2.7 times that of bitcoin’s, saying, “Bitcoin dominance no longer defines altseason, trading volume does, it’s a very selective altseason though.”
“With no fresh liquidity, it feels like a PvP fight over a fixed pie, and trading volume shows the battles are getting fiercer,” he further said.
Ju also remarked that bitcoin appears to be decoupling from the broader crypto ecosystem.
“Bitcoin is drifting away from the crypto ecosystem, as bitcoin has built its own paper-based Layer 2 ecosystem through ETFs, MSTR, funds, and more,” and added that “altcoins used to move together based on their correlation with bitcoin, but that pattern has now broken. Only a few are starting to show independent trends as they attract new liquidity.”
CryptoQuant observes that bitcoin demand is subdued
CryptoQuant analysts noted in a report sent to The Block that bitcoin demand remains subdued. They reported that “its apparent demand growth has continued to decline after a period of acceleration in November-December 2024, spurred by the U.S. election results, declining from 279,000 on December 4 to 70,000 today.” They added that bitcoin purchases from ETFs have significantly dropped from 18,000 to negative 1,000.
Additionally, the analysts explained that the Inter-exchange Flow Pulse — which tracks the movement of bitcoin between exchanges, indicating lower short-term buying demand — has decelerated, crossing its 90-day moving average.
Stablecoin liquidity is another crucial factor impacting current market conditions. Although the total market capitalization of stablecoins has reached new highs above $200 billion, its pace has slowed. “For example, the 60-day change of USDT’s market capitalization is now $1.5 billion, down 92% since Dec. 16, when it hit $20.4 billion,” CryptoQuant analysts said. They stressed that a fresh wave of stablecoin liquidity expansion is necessary for bitcoin to rally again.
