Key Points
As the altcoin season index reached 61, the open contracts for altcoins hit $61.7 billion—marking the first test since early 2025. However, the decline in rotation flow has raised doubts about whether this breakout indicates that the altcoin season will last.
In less than 72 hours, the cryptocurrency market has evaporated nearly $20 billion, with Bitcoin [BTC] alone losing about $10 billion, indicating that this cycle is still largely dominated by 'BTC'.
In this context, Bitcoin's dominance [BTC.D] has fallen to a multi-month low of 57%, while TOTAL2 (excluding BTC market cap) has also declined. In summary, fund rotation remains steady, reinforcing market risk aversion.
Despite muted capital flow, altcoin holdings have surged.
In this context, on August 22 (Friday), the open interest (OI) for altcoin futures surged by $9.2 billion, pushing the total open interest for altcoins (red line) to a historic high of $61.7 billion. This indicates that, despite short-term volatility, the leverage for altcoins is still rising.
Source: Glassnode
Typically, peaks in OI tend to track Bitcoin's price movements.
However, the OI for top altcoins (beige bar) has steadily risen from $20 billion in March to $60 billion at the end of August, increasing by nearly $40 billion, surpassing BTC's $30 billion OI growth during the same period.
In short, the altcoin market may be overheated. Traders may seize the opportunity in the altcoin market, but will this exacerbate the volatility cycle due to weakened liquidity rotation?
The altcoin index has broken through, but historical experience suggests caution.
High leverage across various altcoins has amplified the pullback.
In line with this, the holdings of top altcoin Ethereum [#ETH ] have dropped nearly 4% in the past 24 hours, consistent with its 3% price decline. Meanwhile, Bitcoin's decline is contained at 2.68%.
That said, top altcoins have suffered a deeper hit, initially triggered by Bitcoin's adjustment, but this hit has been amplified as leverage has been washed away.
This caused the altcoin season index to drop from 61 the previous day to 56.
Source: Blockchaincenter
History Warns
Similar situations from late January to early February restricted the altcoin market's movements.
The index once reached 61 points, but #BTC the monthly decline was 18%, causing it to drop to 20 points by the end of the first quarter. Ethereum saw a larger decline, dropping to a monthly low of $1,440, with other altcoins following suit.
Currently, the market is showing signs of pressure: altcoins remain fragile, leverage is being washed away, and unless rotation flow rebounds, any recovery may be short-lived, once again limiting the peak season for altcoins.
