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The current altcoin downtrend “points towards possible capitulation as overleveraged positions are flushed out,” analysts told Cointelegraph.
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Nearly a quarter of the 200 largest cryptocurrencies have sunk to their lowest price levels in over a year, prompting analysts to predict a potential market capitulation and a possible rebound for altcoins.
Over 24% of the top 200 tokens by market capitalization have fallen to a one-year low, according to data shared by Jamie Coutts, chief crypto analyst at Real Vision. In a Feb. 19 X post, Coutts noted:
“The Feb 7 washout pushed 24% of the Top 200 to 365-day lows—the highest since Aug 5, 2024 (28%), which marked last year’s pullback low.”
“In bear markets, >30% readings are common before capitulation. The question: are we in a bear or bull market,” he added.
Top 200 cryptocurrencies. Source: Jamie Coutts
The current downturn may signal an incoming market capitulation, according to Juan Pellicer, senior research analyst at crypto intelligence platform IntoTheBlock.
“The recent market correction, with significant liquidations (especially in assets like Solana) and a drop in total crypto market cap to $3.13 trillion, points toward possible capitulation as overleveraged positions are flushed out,” Pellicer told Cointelegraph.
In financial markets, capitulation refers to investors selling their positions in panic, leading to a significant price decline, signaling an imminent market bottom before the start of the next uptrend.
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The current downtrend is likely just a temporary correction for most of these tokens, said Pellicer said, adding:
“The nuanced impact of tariffs and the influence of AI valuations (due to DeepSeek impact) suggest the bull market may continue. Therefore, this could simply be a retracement for some of these coins, rather than the start of a wider downturn.”
Crypto investor sentiment continues to hinge on the ongoing trade tensions between the United States and China.
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Memecoins disrupt altcoin liquidity
Some crypto industry watchers are concerned about the wider crypto market effects of the current memecoin frenzy among retail investors.
This may limit the capital and upside potential of the wider altcoin market, according to Edwin Mata, co-founder and CEO of Brickken, a European real-world asset tokenization platform.
“A critical factor in this market dislocation is the ongoing fragmentation of liquidity,” Mata told Cointelegraph, adding:
“The rise of memecoins promoted by high-profile individuals has distorted capital flows, siphoning liquidity away from more established projects.”
“This trend introduces an additional layer of volatility and speculation, making traditional market recovery patterns less predictable,” he added.
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This article first appeared at Cointelegraph.com News
