Altcoin Season Setup Advances: CEX Volume Hits Cycle Highs Despite Price Weakness

Overview

Recent developments in the altcoin market reveal a stark contrast to earlier expectations for a robust altcoin season in 2025. Instead of a widespread rally, many altcoins have faced significant declines, leading to a challenging landscape as 2026 approaches. The situation has raised concerns among analysts about the potential for further downturns in the sector.

Current Market Conditions

The anticipated altcoin season for 2025 has not materialized, as many altcoins have experienced deep and prolonged drawdowns. This trend has resulted in substantial capital loss, with a growing number of investors exiting the market. As 2026 looms, sentiment surrounding altcoins remains fragile, with analysts cautioning that the worst may still be ahead. They suggest that structural weaknesses, declining liquidity, and diminishing retail participation could contribute to another downturn in the altcoin sector.

Market data supports this cautious outlook, particularly regarding the Crypto Total Market Cap, which excludes the top 10 assets. This metric, often referred to as the OTHERS index, has seen a significant contraction, dropping by more than 50% since December 2024. The market capitalization has fallen from approximately $451 billion to around $182 billion over the course of the past year, underscoring the extent of capital destruction among mid- and small-cap tokens. This decline reflects aggressive de-risking, weak demand, and ongoing selling pressure within the altcoin market.

Despite these challenges, some analysts remain optimistic about the potential for recovery. They point to historical patterns where periods of extreme underperformance and investor capitulation have often preceded strong altcoin recoveries. From this viewpoint, 2026 could serve as a delayed entry point for an altcoin season, contingent upon improvements in liquidity conditions and capital rotation.

Trading Activity Insights

A recent report from CryptoQuant presents an intriguing perspective on the current trading landscape. Contrary to the prevailing belief that this cycle has yielded “no altcoin season,” the report highlights a significant increase in centralized exchange trading volume for altcoins, excluding the top five assets. This uptick in trading activity occurs even as prices remain depressed across much of the market, illustrating a divergence between volume and price that contributes to ongoing market confusion.

While many tokens have lost considerable value, on-chain and exchange data indicate that trading activity has not diminished. Instead, the market is undergoing a structural shift, characterized by a decline in retail participation. Many smaller investors have capitulated and exited their positions, but this has not led to a decrease in overall trading volume. The analysis suggests that altcoin dominance is increasingly concentrated among larger players, with whales and professional participants capturing a growing share of altcoin activity. These participants are taking advantage of periods of low liquidity and weak sentiment to accumulate positions or rotate capital.

From author

The current state of the altcoin market reveals a complex landscape marked by significant challenges and potential opportunities. While the overall sentiment remains cautious, the elevated trading activity among larger players may indicate a transformation rather than a complete absence of an altcoin cycle. Observing how these dynamics evolve in the coming months will be crucial for understanding the future trajectory of the altcoin market.

Impact on the crypto market

• The decline in the OTHERS index highlights the significant capital loss within the altcoin market, affecting investor sentiment.
• The structural shift towards whale-driven trading activity may alter the dynamics of the market, potentially leading to future price movements.
• The concentration of trading volume among larger participants suggests a changing landscape, where retail investors play a diminished role.
• Continued selling pressure and weak demand may hinder recovery efforts, emphasizing the need for improved market conditions.
• Analysts’ differing perspectives on the potential for recovery indicate uncertainty in the market, which could influence investment strategies going forward.