Altcoin Sector Signals Rebound as Key Indicators Flash Buy
1min read In early 2025, the altcoin sector experienced a significant sell-off, with major cryptocurrencies such as Solana [SOL] and Ethereum [ETH] losing over 65% of their value. However, a key indicator has recently flashed a 'BUY' signal, suggesting that the sector may be poised for a rebound.
CryptoQuant analyst DarkFost noted that the aggregate altcoin trading volume positioning has entered a buying zone, as defined by the 30-day moving average falling below the annual average. This indicator last reached these levels in September 2023, just after the end of the bear market. The low readings of the indicator mirrored the undervalued market conditions just before the altcoin sector exploded in late 2023.
Despite this bullish outlook, the dominance of Bitcoin (BTC.D) and Tether USDT (USDT.D) did not align with the optimistic view. In November 2024, USDT.D dropped as speculators swapped stablecoins for altcoins, leading to a decrease in BTC.D. However, in 2025, BTC.D climbed to 63.5%, indicating that capital was moving from altcoins to Bitcoin. Additionally, USDT.D rose from 4% to 5.6%, suggesting that cautious traders were fleeing to stablecoins to preserve capital from the first-quarter drawdowns.
The Relative Strength Index (RSI) heatmap and funding rates revealed that the altcoin sector was undervalued and had less froth, aligning with DarkFost’s outlook. In late 2024, funding rates hit 50-80%, signaling strong bullish sentiment and over-leverage, which often leads to sharp pullbacks. However, current funding rates are below 10% across several altcoins, hinting at a stable market that could rally higher under positive catalysts.
Some altcoins have already shown strong performance, with Onyxcoin [XCN] and Fartcoin seeing over 100% gains in the past week. Others, like Curve DAO [CRV], have surged by nearly 50% over the past month. These outliers suggest that there is potential for further gains in the altcoin sector, especially if the macro environment improves.
In summary, while the altcoin sector has faced significant challenges in early 2025, key indicators suggest that it may be entering a buying zone. The dominance of Bitcoin and USDT, as well as the RSI heatmap and funding rates, provide a mixed outlook. However, the performance of select altcoins indicates that there is potential for further gains in the sector. Investors with a mid-term outlook may want to consider slowly entering altcoin positions, as the market could rally higher under positive catalysts.
