The broader altcoin market is showing signs of extreme technical weakness, with fresh data from Binance indicating that only 3% of altcoins hold the 200-EMA trend support. A level typically used to distinguish long-term bullish and bearish trends.

Such low readings are rare, and historically they appear during periods of heightened market stress.

The 200-EMA often acts as a dividing line between accumulation and distribution phases. When most assets trade below it, market structure tends to favor defensive positioning rather than speculative expansion.

Technical Structure

Ethereum price retested on Thursday, found support just below the descending trendline, and recovered nearly 6% over the next three days. 

As of Monday, ETH is approaching the daily resistance level at $3,060. If ETH closes above $3,060 daily, it could extend the recovery toward the December 10 high at $3,447. 

The RSI reads 48.55, pointing upward toward the neutral 50 level, indicating early signs of fading bearish momentum. 

Also, the Moving Average Convergence Divergence (MACD) lines are converging, and a flip to a bullish crossover would further support the bullish outlook.

Adding to the bearish pressure, from December 15 to December 19, Ethereum spot ETFs recorded a weekly net outflow of $644 million, with none of the nine ETFs posting net inflows. 

Liquidity Pressure Across the Altcoin Market

Since early October, liquidity conditions for altcoins have steadily deteriorated. The Total2 market capitalization, which tracks the combined value of cryptocurrencies excluding Bitcoin and stablecoins, has dropped by roughly 36%. 

When the top ten cryptocurrencies are excluded, losses deepen further, approaching a 46% drawdown, underscoring how severe the decline has been for mid- and small-cap tokens.

This pattern suggests that capital has continued to rotate away from riskier assets, with funds instead concentrated in Bitcoin, stablecoins, and select large-cap names.

Investor Behavior Reflects Risk-Off Sentiment

With only a handful of altcoins maintaining long-term trend support, investor behavior points clearly toward capital preservation. 

Short-lived rallies have failed to attract follow-through buying, and repeated expectations of a broad “altseason” have been invalidated as liquidity remains shallow.

In this phase, investors appear unwilling to chase volatility. Instead, positioning remains cautious, with limited appetite for sustained exposure to speculative assets.

Also Read: ETH Struggles to Stay Above $3,000: Is Recovery in Doubt?

Conclusion

Historically, when most altcoins were trading below their 200-day average, it occurred near a major market reversal point. 

While it does not mean the market will recover immediately, it still lowers valuations and resets expectations.

A change is likely indicated by an increase in the percentage of altcoins reclaiming their long-term averages, suggesting risk appetite is back and broader participation is returning.

However, until such a confirmation appears, the data indicates that the altcoin market is still very much in a risk-off phase.