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【Analysis of Altcoins】
Ethereum has led to a significant decline in the altcoin sector, causing many mainstream cryptocurrencies to fall below critical price levels. Market expert CyrilXBT has deeply analyzed the reasons for this decline on social media platform X and explored the possibility of a recovery rebound in 2026.
Causes of the Altcoin Predicament
CyrilXBT first pointed out the impact of Bitcoin's dominance in the analysis.
When Bitcoin's dominance increases, funds tend to concentrate on this asset rather than flowing out of the entire cryptocurrency market. This indicates that Bitcoin becomes a safe haven for investors, while altcoins turn into a source of liquidity. As a result, risks are compressed before expansion, a pattern that has been commonly seen in past cycles, usually indicating that altcoins will regain momentum.
Another driver of the current turmoil is tax loss harvesting. Cryptocurrencies are one of the few major asset classes that have seen declines since the beginning of the year, while stocks and gold have risen. To confirm losses before the end of the year, funds are actively selling off losing altcoin holdings, cryptocurrency ETFs, and other high-risk assets.
CyrilXBT pointed out that this pressure may gradually dissipate after the New Year.
Liquidity Lag and Demand Exhaustion
The expert further emphasized that the liquidity effect often has a lag.
Although the Federal Reserve has begun to reintroduce liquidity into the system, the market typically does not react immediately. Historical experience shows that liquidity improvement occurs first, followed by Bitcoin stabilizing, with altcoins lagging behind. The current market is still in the lag phase and has not yet welcomed the anticipated breakthrough行情.
Faced with low volatility, stagnant Bitcoin prices, and continuously declining altcoins, CyrilXBT believes this reminds one of previous cycles, such as the recovery phases in early 2019 and early 2023.
Overall, the decline in the altcoin market can be attributed to multiple interconnected factors: the rise in Bitcoin's dominance, tax loss selling reaching its peak, thin liquidity, exhausted demand, and the delayed manifestation of macro liquidity effects.
Experts point out that the current moment resembles a "compression phase" rather than a "panic selling," and this phase is often a precursor to significant recovery行情. As lag effects gradually fade, seasonal selling pressure eases, and the liquidity environment improves, the market may lay the foundation for a potential recovery in 2026.