Capital Flows Out of Bitcoin and Ethereum into Stablecoins, No Signs of Altseason Yet

Recent on-chain data analysis suggests that capital is continuing to flow out of Bitcoin and Ethereum into stablecoins, with no clear signs of an upcoming altseason. According to on-chain data analyst Ali Martinez, this trend indicates that investors are currently favoring safer assets, likely waiting for better entry points before making their next move.

Declining Capital Inflows into Bitcoin and Ethereum

The chart accompanying Martinez’s statement shows a clear trend of declining capital inflows into both Bitcoin and Ethereum, while stablecoins have seen a significant increase in net capital change. Specifically, as of February 4, Bitcoin had a net capital change of $0.0412 million, and Ethereum saw $0.0048 million. In contrast, stablecoins experienced a much larger shift, with a net capital change of $0.0644 million.

No Signs of Altseason Yet

Historically, capital rotations from Bitcoin into smaller-cap coins have signaled the start of an altcoin season. However, according to CoinMarketCap, the altcoin season index stands at just 33, indicating that only 33% of the top 100 cryptos (excluding stablecoins and asset-backed tokens) are outperforming Bitcoin over the last 90 days. Martinez’s chart also shows that the oscillator indicators remain in a neutral position, showing no evidence of a brewing altseason.

Speculative Capital Stuck in Illiquid On-Chain Meme Coins

Another analyst, Deutscher, shared his thoughts on why this cycle is different as far as the arrival of altseason is concerned. He explained that instead of moving into established altcoins, traders have been chasing fast-moving low-cap on-chain tokens. As a result, that speculative capital “got stuck in illiquid on-chain meme coins,” he said.

For investors looking to navigate the current market, here are some key takeaways:

  • Keep an eye on capital flows into and out of major cryptocurrencies like Bitcoin and Ethereum.
  • Monitor the altcoin season index to gauge the performance of smaller-cap coins relative to Bitcoin.
  • Be cautious of speculative capital flows into illiquid on-chain meme coins.

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