Altcoin Massacre on Bankless

Alts flail. Risk assets got brutalized this week, with a sharp decline on Tuesday morning followed by a leg lower on Wednesday from a seemingly hot inflation print and nothing but downside throughout the Friday session. What’s going on in markets, and is there any cause for concern?

The S&P 500 declined by 1.7% this week, the index’s largest weekly sell off since markets bottomed last October, and the further out the risk curve you go, the more dramatic the losses become.

Although Bitcoin’s peak-to-trough losses, which exceeded 10% this week, may seem substantial when compared to the stock market’s, they are muted in relation to the significant drawdowns experienced by other crypto tokens, with BTC’s decline in price combining with a surge in dominance to massacre alts.

Bitcoin Dominance cracked above resistance that had been in place since December 2023, trading above the 55% mark for the first sustained period of time since April 2021. The move higher coincided with a massive red candle on the ETH/BTC ratio, which rejected off the key 0.05 support level before wicking down to set a new 2024 low.

While some on Crypto Twitter had previously expressed confidence that Bitcoin Dominance’s rejection off the 55% level would herald the arrival of alt season, today’s violent move higher should be leading believers to challenge such notions.

Progressing further along the risk curve, popular memecoins and freshly airdropped tokens experienced even heavier losses on Friday, ranging from the low teens to the high twenties on a percentage basis.

 It is worth noting that this drawdown coincides with the arrival of tax season in the United States, which is likely acting as a major liquidity drain forcing filers to sell assets to meet taxes liabilities from a 2023 filled with gains.

Friday marked the last opportunity for many traders to sell in time for traders to cover outstanding tax obligations, and it is possible that markets rebound into next week with this source of added sell pressure now alleviated.