Will Altcoins Seize the Next Liquidity Wave?

Altcoins could rally as Bitcoin consolidates, but overleveraging may trigger cascading liquidations.

Earlier this week, Bitcoin surged to an all-time peak of $126,000, which lifted the collective crypto market cap to around $4.4 trillion. The flagship crypto has since retreated to nearly $121,000. New data now suggest that altcoins could rally as Bitcoin consolidates.

But structural fragility remains a major risk.

Critical Divergence Shaping Up?

According to Altcoin Vector, the market may be approaching a “turning point” moment for altcoins. The platform noted that historically, “Altseason” begins when the inverse correlation between smaller altcoins (excluding the top 10) and USDT dominance tightens before a liquidity rotation occurs.

That same setup, which last year led to a major altcoin rally, appears to be forming again. Previously, as USDT dominance declined and the Alts/BTC ratio climbed, liquidity cycled from Bitcoin into Ethereum and then large-cap altcoins, which drove significant gains across the market.

However, Altcoin Vector added that this divergence has not yet been confirmed.

Currently, BTC’s dominance is sitting at 60% Point of Control. This level is important since it has historically marked major shifts in capital rotation. At this juncture, dominance often stabilizes before deciding whether to extend Bitcoin’s market lead or allow liquidity to rotate into altcoins. Crypto analytics platform ‘Bitcoin Vector’ explained that the current capture of this zone may signal a maturing Bitcoin phase and a potential inflection point ahead.

If BTC maintains its structure while dominance consolidates, altcoins could start attracting capital. However, Bitcoin Vector warned that altcoins remain structurally fragile, as overleveraging frequently triggers cascading liquidations during Bitcoin retests, like the recent move near $120K, events that ultimately strengthen BTC’s dominance. Liquidity trends are expected to reveal the next phase.

Altcoins Poised for November Recovery

Glassnode founders Negentropic believe that the crypto market appears to be approaching the final volatility-driven shakeout before a major upswing. This means that once this phase concludes, Bitcoin could fetch a fresh all-time high, while altcoins are expected to begin their recovery as early as next week.

Such a rebound in altcoin activity is expected to gain momentum heading into November, and potentially represent the start of a full-fledged altseason.