Liquidity concentrates in Bitcoin (BTC) and Ethereum (ETH)… Altcoin rally losing staying power

An analysis suggests that since last year, liquidity in the digital-asset (cryptocurrency) market has been concentrating in a handful of core assets such as Bitcoin (BTC) and Ethereum (ETH), weakening the momentum behind altcoin rallies.

According to The Block, a digital-asset-focused media outlet, crypto market-making firm Wintermute said in a recent report that “the market structure for digital assets has clearly changed,” adding that “while liquidity is flowing into BTC, ETH and a few large-cap altcoins, the spread of capital into mid- and small-cap altcoins has shrunk significantly.”

The report said the average duration of last year’s altcoin rallies was 19 days, sharply shorter than the prior year’s average of 61 days. It explained that an early end to the memecoin cycle at the start of this year also weighed on the broader market by constraining capital rotation.

Changes have also been detected in how institutional investors trade. Wintermute said that “institutional participants are increasingly favoring short-term, news- and event-driven strategies over simple directional bets tied to seasonal trends (such as Uptober),” and assessed this as “a shift toward more repeatable and sophisticated trading approaches.”