Altcoin Rally Momentum Weakens as Liquidity Shifts to Bitcoin and Ethereum

VADODARA, January 13, 2026 — Market structure suggests a significant shift in cryptocurrency liquidity patterns, with capital increasingly concentrating in Bitcoin (BTC) and Ethereum (ETH) at the expense of altcoin rallies, according to a report from crypto market-making firm Wintermute. This daily crypto analysis examines the data behind this trend and its implications for market participants.

Market Context & Background

Historical cycles indicate that altcoin rallies typically follow Bitcoin's momentum, with liquidity dispersing across smaller-cap assets during bullish phases. According to Wintermute's report cited by The Block, this pattern has fundamentally changed since last year. The average duration of an altcoin rally decreased from 61 days in the prior year to just 19 days last year, suggesting a compression in market cycles. This shift mirrors the 2021 post-bull market correction, where liquidity retreated to major assets during periods of uncertainty. The early conclusion of the memecoin cycle at the beginning of this year further limited capital spread, creating what technical analysts might term a Liquidity Grab by dominant assets.

Related developments in the market include the CoinGecko sale at a $500 million valuation, signaling consolidation in crypto data services, and EZ Labs' investment in a CZ-advised DEX, highlighting strategic moves amid current market fear.

What Happened?

According to Wintermute's analysis, liquidity has increasingly concentrated in Bitcoin and Ethereum rather than dispersing across altcoins. The firm provided specific metrics: the average altcoin rally duration dropped to 19 days in the last year from 61 days previously, a 69% decrease. This indicates a weakening of momentum for altcoin rallies. Additionally, the report observed a change in institutional trading strategies, with participants favoring short-term, news-driven approaches over directional bets. Market structure suggests a move away from simpler seasonal trading toward more repetitive and sophisticated methods, potentially involving algorithmic execution and derivatives.

Technical Analysis & Price Action

On-chain data indicates that Bitcoin's current price of $92,332 sits above key support levels, but the 24-hour trend of 1.30% masks underlying volatility. Volume profile analysis shows increased trading activity in BTC and ETH pairs, while altcoin volumes have declined relative to their market caps. A critical Fair Value Gap (FVG) exists between $90,000 and $92,000 for Bitcoin, which could act as a magnet for price action. The Relative Strength Index (RSI) for major altcoins is trending downward, suggesting weakening momentum. Bullish invalidation for the current altcoin market structure is set at Bitcoin breaking below $90,000, which would likely trigger further capital flight to safety. Bearish invalidation occurs if altcoins collectively break above their 50-day moving averages, indicating a resurgence in diversified liquidity.

By The Numbers

Why It Matters

For institutional investors, this liquidity concentration reduces opportunities for alpha generation through altcoin diversification, potentially leading to increased reliance on derivatives and structured products. Retail investors face diminished returns from altcoin speculation, as capital flows favor established assets. Market structure suggests this trend could exacerbate during periods of macroeconomic uncertainty, such as fluctuations in the Fed Funds Rate, which historically correlate with risk-off behavior in crypto. The shift to short-term strategies may increase market volatility and create Order Block formations that savvy traders can exploit.

Community Sentiment

Market analysts on X/Twitter have noted the divergence between Bitcoin's resilience and altcoin weakness, with some attributing it to regulatory clarity favoring major assets. Others question whether this is a temporary rotation or a permanent change in market dynamics. Sentiment analysis from social platforms indicates increased caution, aligning with the Fear & Greed Index score of 26.

Price Prediction / Future Outlook

Bullish Case: If Bitcoin maintains support above $90,000 and Ethereum's upcoming Pectra upgrade (EIP-4844) boosts network utility, liquidity could gradually return to altcoins, leading to a broad-based rally. Historical patterns indicate that altcoin seasons often follow Bitcoin consolidation phases.

Bearish Case: Should Bitcoin break below $90,000, a Gamma Squeeze in derivatives markets could accelerate the liquidity shift to major assets, causing altcoin capitulation. The current fear sentiment and institutional short-term focus may prolong this trend, limiting altcoin recovery.