Mapping the altcoin season – Will BNB, AAVE outshine the rest?

• Notable reduction in capital inflows into the cryptocurrency market has contributed to delay in altseason
• Tokens like BNB, AAVE are expected to maintain their bullish outlook despite the setback

The larger cryptocurrency market’s capitalization has been on a decline lately, dropping by 2.06% to $3.33 trillion. However, a broader analysis revealed a steeper fall of 18.33% – From $3.7 trillion in November to $3.28 trillion, on 24 December.

In the last 24 hours, the market’s decline has coincided with a 3.3% hike in trading volume, with figures for the same hitting $121.84 billion. This indicated that traders’ selling pressure has been backed by actual momentum.

Such downward market trends often influence altcoin performances, especially since these tokens typically follow the broader market’s direction. In fact, according to AMBCrypto’s analysis, the decline in capital inflows has played a critical role in the ongoing market downturn.

Liquidity flows see a significant downturn

According to Glassnode, there has been a notable decline in capital inflows into the cryptocurrency market – A sign of lack of active investment.

Data from the Aggregate Market Realized Value Net Position Change metric revealed that capital inflows, measured in USD, dropped from $134 billion on 10 December to $100 billion, at the time of writing.

Source: X

Such a downturn is usually a sign that the market lacks bullish sentiment for a majority of cryptocurrencies. Instead, investors appear to favor holding stable assets rather than purchasing volatile tokens. This would reinforce bearish market sentiment and increase the likelihood of sustained declines.

Despite the overall fall in capital inflows though, some tokens can be expected to maintain their bullish momentum and potentially outperform the broader market.

BNB poised to set a new all-time high

BNB remains one of the best-performing cryptocurrency assets of 2024, achieving two all-time highs within the year.

After its previous peak of $691.77 in 2021, BNB surpassed this level in June 2024, hitting $721.80 on the charts. By December 2024, it set another record, trading at $793.86.

Source: Trading View

At the time of writing, BNB seemed to be in an accumulation phase, as indicated by its chart patterns. If the token exits this phase, it could ignite another rally, with a strong possibility of surpassing its previous high and targeting levels above $800.

AAVE remains structurally bullish

On the price chart, AAVE has maintained its position in the bullish zone. After months of market consolidation, the asset broke out in January, rallying by 332.78% to hit $399.85 – A level last seen in 2021.

AAVE achieved a new all-time high for its Total Value Locked (TVL) on 17 December, peaking at $23.19 billion. However, its TVL has since recorded a minor pullback to $20.63 billion. This slight dip suggested that AAVE remains fundamentally bullish, especially as activity on its protocol continues to grow.

Source: DeFiLlama

If the TVL stabilizes or increases, AAVE’s price is likely to extend its upward momentum. Especially since it’s central in driving the platform’s operations.

A key requirement for altcoin season

A major condition for an altseason rally to materialize is a decline in Bitcoin Dominance, a metric that compares Bitcoin’s performance to other altcoins in the market. When Bitcoin’s Dominance is high, it indicates that Bitcoin is outperforming most altcoins. Conversely, a lower dominance suggests that altcoins are seeing stronger performance.

At the time of writing, CoinMarketCap reported that Bitcoin Dominance fell slightly by 0.18%, dropping to 56.94%.

Given that Bitcoin Dominance remains relatively high, the altseason may be delayed. At least until a more significant drop occurs, potentially bringing it below the 50% mark.