The prevailing negative market sentiment is hurting altcoin holders the most. Unfortunately, market relief for the segment isn’t likely in the near term either.
According to the analytics firm Swissblock, the sector is still struggling under firm bearish momentum. However, the pressure might be easing, with the firm citing its high-precision, proprietary Alts impulse signal.
“While the negative momentum is beginning to decelerate, a positive crossover remains a distant prospect for now.”
Source: Swissblock
This is a short-term indicator that flagged the early January altcoin recovery and its subsequent cool-off in the second half of the month.
If another positive crossover is flagged when the blue line (positive signal) crosses above the red (negative momentum), then an altcoin market relief could be likely. In the meantime, the gap between negative and positive impulse trackers suggested that the altcoin distress was far from over.
Mapping the altcoin market’s distress
As BTC’s price fell below $95k from mid-January, the altcoin sell-off also intensified on Binance, as indicated by rising altcoin inflows.
Since the metric hadn’t eased as of press time, the pressure could cap a strong relief for the sector.
Source: CryptoQuant
In fact, less than 5% of altcoins on the Binance exchange were above the 200-day Moving Average (SMA) at press time – A key bullish momentum indicator.
Overall, this illustrated that most altcoins were struggling under strong bearish momentum as the sell-off deepened.
Source: CryptoQuant
Here, it’s worth noting that these massive capitulation levels on Binance have led to past reversals.
Hence, any market sentiment reset could lift some of the top altcoin gems with strong fundamentals.
AI leads altcoin market’s sell-off
From a market category perspective, AI was the hardest hit over the past month of trading, according to Arkham data. The sub-sector was down 57% on average, nearly matching DeFi’s losses.
Real-world assets (RWA), on the other hand, declined by only 10% on average and were the best-performing segment during the early 2026 risk-off environment. These were on-chain stocks and ETFs tracking U.S. equity markets – A sign that TradFi outperformed crypto assets.
Source: Arkham
Put simply, altcoin momentum has stalled. The altseason index has dropped to 39 from nearly 60 in January too. Its distress has been accelerated by BTC’s extended plunge below $70k and Ethereum’s weakness near $2k.
On the contrary, select gems like Canton’s CC have posted double-digit gains and outperformed BTC despite the broader market drawdown.
Final Thoughts
- Altcoin market’s negative momentum has eased and could reverse to positive if risk appetite returns.
- AI-based tokens sold the hardest, followed by DeFi tokens, while RWA held up relatively well during the dump.
