Altcoins continue to be under significant pressure across the board following the historic crash that rocked the crypto market on Friday. The sudden drop triggered the largest liquidation event in crypto history, with billions of leveraged positions wiped out within minutes. Even established blue-chip stocks like Chainlink (LINK) and Avalanche (AVAX) saw their prices drop more than 60% before partially recovering over the weekend.
Since then, prices have stabilized at a slightly higher level, but investor confidence remains fragile. Markets are still reeling from the shock and continued volatility has made traders cautious. Top analyst Dirkforst said the current market structure reflects deep apathy and capitulation. He shared data showing that only 10% of altcoins listed on Binance are trading above their 200-day moving average. This means that 90% of the altcoin market is below its long-term trend.
This extreme figure highlights the magnitude of the decline and the lack of strong recovery momentum so far. Historically, such setups are often done prior to the accumulation phase as smart money begins to take positions for the next cycle. However, sentiment remains fragile and the coming days will determine whether this is a true bottom zone or a pause before the next leg lower.
Market depletion could be a sign of the next recovery
Dirkforst explains that the current state of the altcoin market has historically marked moments of capitulation and opportunity. Similar configurations occurred three times throughout this cycle, followed by notable short-term rallies across major altcoins. These periods of extreme sell-off often represent the point at which the downward momentum slows and patient investors begin to accumulate high-quality assets at deep discounts.
Dirkforst emphasizes that these settings rarely last long. Once market sentiment stabilizes and traders realize the excessive fear priced into altcoins, capital tends to return quickly, causing a strong bailout rally. But he cautions that now is not the time to buy indiscriminately. The key, he said, is to focus on projects that have maintained liquidity, developer activity, and on-chain usage during the broader economic downturn. These factors often separate tokens that survive over the long term from speculative tokens that struggle to recover.
For investors who missed previous market cycles, this type of structure could offer one of the most favorable risk-reward setups in months. Still, timing is still important. As Dirkforst points out, once markets realize they have overcorrected, re-entry opportunities quickly disappear and are often replaced by aggressive bull markets that reward those who acted bravely at the peak of fear.
Altcoins face critical support test
Cryptocurrency market capitalization, which excludes the top 10 assets, is a key indicator of broader altcoin performance and is currently hovering around $263 billion, reflecting a week-on-week decline of 2.3%. This chart clearly shows the stress across the altcoin sector after last week’s market-wide crash, with prices reversing sharply from the $285 billion area after months of rejection near resistance.
Technically, market cap is still above its 200-week moving average (red line), which has served as a reliable support level throughout the cycle so far. However, recent volatility and long downside exposure highlight strong selling pressure, suggesting many investors are being forced to avoid risk amid uncertainty. The 50-week moving average (blue) and 100-week moving average (green) are currently trending sideways, indicating a potentially prolonged correction phase before a sustainable recovery begins.
Historically, this structure (a significant correction to a major moving average) often precedes an accumulation phase that marks a macro bottom. As long as the $250 billion level persists, the broader altcoin market could stabilize and gradually regain momentum. However, a weekly close below this support could trigger a further wave of liquidations, potentially retesting the $200 billion area, a level associated with the previous cycle low.
Featured image from ChatGPT, chart from TradingView.com
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