Capital Rotation and TOTAL3 Indicators

Analysts are paying particular attention to TOTAL3, the metric reflecting the total market capitalization excluding Bitcoin and stablecoins. According to the analysis group known as “Stockmoney Lizards,” the current stagnation in altcoins may actually be an early sign of incoming capital rotation. They note that liquidity often moves from Bitcoin into stablecoins before eventually flowing into higher-risk assets:

“Bitcoin sells off → capital shifts to stablecoins → stable liquidity builds → then rotates into altcoins. We are currently in the waiting stage, which typically precedes an altseason.”

A New Phase Rather Than the End of a Cycle

Michaël van de Poppe, founder of MN Fund, echoes this perspective. He argues that the recent turbulence does not mark the end of the broader bull market; instead, it represents the final stretch of the altcoin bear trend. Van de Poppe suggests that the conventional four-year Web3 cycle is no longer an accurate template for current market dynamics, noting that today’s environment reflects a longer, more complex cycle with diverse opportunities emerging across sectors.

Similarly, analyst “Sykodelic” highlights that TOTAL3 is positioned strikingly close to levels observed before major altcoin expansions in previous cycles. Although the recent drop has been difficult for holders, they believe the market is not nearing a top but rather approaching a key inflection point.

Slow but Positive Signs of Recovery for Altcoin

Throughout November, numerous altcoins experienced declines exceeding 50%. However, a modest rebound has begun to take shape. Bitcoin has regained the $91,000 level, while Ethereum has moved above $3,000, offering some short-term relief to traders.

Among the stronger performers, BNB climbed 3.6%, Hyperliquid (HYPE) advanced 5.9%, and Avalanche (AVAX) added around 5% on the day. The total crypto market capitalization now stands near $3.2 trillion, though it remains well below its October peak.

According to analyst Alex Wacy, metrics comparing altcoins to Bitcoin continue to point toward a significant expansion phase. If momentum develops as expected, the market could be on the verge of one of the most notable altcoin rallies in recent years.

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The weakness in Bitcoin and Ethereum, along with the overall selling pressure in the market, suggests that TOTAL3 might extend its downtrend.

Why Is TOTAL3 Dropping?

Several key factors are driving the decline in the altcoin market:

1. Bitcoin Weakness: BTC’s ongoing downtrend is negatively affecting altcoins, causing investors to move liquidity into BTC or stablecoins.
2. Sustained Downtrend: TOTAL3 has been in a falling trend for an extended period, and without a strong breakout, further declines are possible.
3. Liquidity Issues: Low-volume trades and large sell orders are putting additional pressure on altcoin prices.

These factors combined suggest that TOTAL3 may continue its decline, and altcoins could face further losses.

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What Happens if the $784 Billion Support Breaks?

TOTAL3’s $784 billion level is currently the most critical support zone. If it fails to hold, the altcoin market may experience increased selling pressure.

Key levels to watch:

• $784 billion → A crucial support area; losing this level could accelerate the downtrend.
• $700 billion → A further drop could lead to a widespread sell-off in altcoins.

If TOTAL3 falls below these levels, many altcoins could hit new lows. Additionally, Bitcoin’s movement will play a crucial role in determining the direction of the altcoin market.

What Is Needed for an Altcoin Market Recovery?

For the altcoin market to recover, several conditions must be met:

• Bitcoin needs to stabilize: A BTC uptrend is crucial for altcoins to regain momentum.
• Liquidity must increase: A renewed interest from investors and higher trading volumes are necessary.
• Downtrend breakout: If TOTAL3 surpasses $900 billion, breaking above the falling trend, it could trigger a new bullish phase for altcoins.

Currently, the market outlook remains bearish, and investors should closely monitor the $784 billion support level to assess the next move.

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The post TOTAL3 at a Critical Support Level: Are Altcoins at Risk? appeared first on Coin Engineer.

Downtrend Continues: Key Levels to Watch

From a technical perspective, TOTAL3 is clearly following a downtrend on the four-hour chart. If this trend does not break to the upside, a pullback towards $845 billion could be expected in the coming days. However, if the downtrend is broken, the first target to watch will be the $950 billion order block level. This level is considered a crucial threshold for altcoins to regain momentum.

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What’s Driving the Decline?

The market uncertainty is not only driven by technical factors. The price movements of Bitcoin and Ethereum have a direct impact on altcoins, and BTC’s failure to break key resistance levels has led to a loss of confidence in the altcoin market. Additionally, macroeconomic developments are reducing risk appetite in the crypto market. Uncertainty regarding the U.S. Federal Reserve (FED)’s interest rate policies is causing investors to act cautiously.

Furthermore, liquidity issues in the market are becoming more apparent. Large investors are opting to stay on the sidelines instead of making new purchases, and declining trading volumes are making the altcoin market even more fragile. Additionally, increasing regulatory pressures from the U.S. and European authorities are further dampening investor sentiment.

For now, the market remains uncertain, and investors should closely monitor critical support and resistance levels. How TOTAL3 reacts around the $875 billion level will be a key factor in determining the direction of altcoins.

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Sharp Declines in Bitcoin and Ethereum

Bitcoin recently plunged from $105,000 to $98,000, marking a 6.6% drop. Similarly, Ethereum fell from $3,300 to $3,050, experiencing a 7.5% loss.

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In yesterday’s analysis, we pointed out that Bitcoin broke its minor trend downward and might see a pullback movement. As expected, this forecast aligned with the market’s actions. Currently, for Bitcoin, the critical levels are:

• Resistance levels: $101,800 and $103,600
• Support levels: $99,200 and $95,400

These levels offer significant insight into Bitcoin’s short-term direction. Any slight upward movement during the day is expected to remain a pullback within the minor trend.

Total3 and Altcoin Market Declines

The shared chart compares Bitcoin’s price movement with the Total3 index, which represents the market cap of all altcoins except Bitcoin and Ethereum. As seen, while Bitcoin dropped 3.03%, the Total3 index experienced a steeper decline of 6.44%.

This demonstrates how altcoins, due to their high volatility and lower liquidity, face greater selling pressure during market downturns.

If Bitcoin holds its current levels, it may provide hope for an altcoin recovery. However, the Total3 index sends a bearish signal about the market’s overall health.

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Altcoin Market Cap Chart (TOTAL3)

The chart highlights the weakness in the market capitalization of cryptocurrencies excluding Bitcoin and Ethereum. The market cap has dropped from $1.08 trillion to $1.05 trillion, signaling a major outflow of capital from the altcoin market.

• Short-Term Moving Averages (EMA): The chart includes 20, 50, 100, and 200-day EMAs, showing increasing short-term weakness in the altcoin market. The intersection of 20 and 50 EMAs signals intensified selling pressure.
• Market Uncertainty: This decline in altcoin market cap reflects a broader trend of investors exiting riskier assets. Many projects that previously saw significant capital inflows have faced substantial losses during this period.

The State of Ethereum

As the second-largest cryptocurrency by market cap, Ethereum (ETH) has also been deeply impacted by these market conditions. Declining from $3,300 to $3,100, ETH continues to serve as a bellwether for other altcoins. The reduction in Ethereum’s market cap has further pressured the projects built on its ecosystem.

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Market Dynamics and Future Expectations

• Liquidity Pressure: The high levels of liquidation in Bitcoin and Ethereum have also impacted the altcoin market. This capital outflow may trigger further selling pressure.
• Macroeconomic Factors: Global uncertainties and rising interest rates have reduced risk appetite in the crypto market. Altcoins, known for their high volatility, have been hit the hardest in this environment.
• Psychological Thresholds: The $1 trillion market cap level in altcoins is seen as a critical threshold. Falling below this level could lead to further market weakness.

The cryptocurrency market, including key assets like Bitcoin and Ethereum, along with the broader altcoin space, remains under significant pressure. Liquidity pressures and investor sentiment suggest that the downtrend may continue. During this period, it is crucial for investors to focus on risk management and keep a close eye on market trends.

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Pseudonymous crypto trader Daan Crypto Trades stated in a Dec. 28 post on X that the TOTAL3—the total market cap of all cryptocurrencies excluding Bitcoin and Ether—needs to surpass its 2021 all-time high of $1.13 trillion and enter price discovery for the “euphoria” or “mania” phase to start.

The Importance of TOTAL3

According to TradingView data, TOTAL3 is currently at $962.78 billion, showing an approximate 91.45% increase since the beginning of the year. However, Daan warned that if the market cap falls below $800 billion, a more cautious approach is necessary.

Daan added, “As long as this trades between ~$840B and ~$1.1T, I think it will be choppy.”

Short-Term Thinking Increases Market Volatility

Some analysts believe that the increasing volatility in the crypto market is due to traders adopting a more short-term perspective compared to previous years.

Syncracy Capital co-founder Daniel Cheung mentioned in a Dec. 28 post on X:

“Everyone decided they were George Soros all of a sudden this cycle, constantly monitoring hourly charts to time entries/exits and playing with leverage.”

Cheung argued that this is why crypto tokens have not experienced breakouts as quickly as in prior cycles.

Traders Begin Rotating Toward Altcoins

According to CoinMarketCap data, the top three gainers among the top 100 cryptocurrencies over the past seven days are:

• Bitget Token (BGB): Up 80.65%
• Virtuals Protocol (VIRTUAL): Up 42.30%
• Pudgy Penguins (PENGU): Up 31.63%

Meanwhile, with Bitcoin dominance nearing 60% in the final days of 2024, some traders believe it is time to shift their accumulation strategies toward altcoins.

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