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- On May 30, $5 billion would be distributed to FTX creditors; analysts believe this sudden liquidity injection could trigger an alt season.
- Bitcoin dominance has currently reduced from 65%, hinting that money could be flowing down to potential altcoins.
Bitcoin dominance has marginally declined, reaching 62.9% of the total market valuation despite recording an impressive move in the past few days to reach a new month high of $108k.
According to our market data, the momentum across the altcoin market continues to fade as the Altcoin Index recedes to 26/100 from the 31/100 recorded some days ago. As highlighted in our previous analysis, this reading was hovering around 43/100 in February, with at least 75 expected to confirm an altseason.
At the time of writing, XRP was down by 9% on its weekly chart. Solana (SOL) was also down by almost 6%, with Dogecoin (DOGE) falling by 3.5%. However, things are expected to change in June with the upcoming repayment to FTX customers.
According to reports, more than $5 billion would be distributed on May 30, becoming the largest single-day payout in the history of crypto bankruptcy. As indicated in our recent news coverage, this payment phase would involve creditors who fall within the Class 5 (Customer Entitlement Claims) or the Class 6 (General Unsecured Claims).
FTX Repayment Impact on the Altcoin Market
While many believe that creditors would hesitate to venture back into the market, others argue that there is a huge chance of reinvesting in altcoins to ignite momentum. As recently mentioned in our news article, FTX creditor advocate, Mr Purple, also disagrees that claimants may reinvest due to their traumatising experience.
Even so, the current market situation is reported to rhyme with the market behaviour on May 7 and May 13, when Bitcoin’s dominance reduced from 65% to 62%. At that time, the altseason index increased to around 37/100, with most assets printing incredible gains. The sentiment cooled off after, with Bitcoin strengthening its dominance from May 14 to May 20, jumping back to 65%.
The BTC/ETH ratio also confirms that the altcoin momentum is weakening while Bitcoin gains strength. From May 7 to May 13, for instance, ETH recorded an impressive gain of 38% against Bitcoin. From May 14 to May 20, ETH lost about 8% of these gains, discouraging the hope of an altseason in the near term. As detailed in our last blog post, ETH appears to be in an accumulation phase as its net exchange outflow reached 230K ETH in a single day on May 16.
Looking at the state of the altcoin market, it is obvious that momentum is currently down. The total valuation of the altcoin market has surged from $1.01 trillion on May 7 to $1.17 trillion. However, the gains remain negative from the $1.26 trillion recorded on May 13.
In just a week, $90 billion is reported to have exited the market. However, it is believed that most of these liquidations are facilitated by retail investors. As noted in our earlier discussion, ETH whales, for instance, are quietly accumulating.
