Crypto market recovery is weak: retail investor sentiment is low, institutional demand is weakening, but alt season is showing signs of hope.

The total market capitalization of Crypto Assets has slightly risen by 2.5% over the past seven days, reaching $3.85 trillion, but lacks buying enthusiasm and significant volume. The market capitalization remains below the 50-day MA, indicating that the market is dominated by short positions, reflecting a lack of risk appetite in the financial markets. Meanwhile, institutional demand is weakening, and the altcoin season seems to have begun, but is limited to those Tokens included in reserves by large enterprises. Additionally, stablecoin issuer Tether has been reported to plan investments in the entire gold Supply Chain, bringing new points of interest to the market.

The total market capitalization of Crypto Assets is weakly rebounding, and market sentiment is becoming cautious.

(Source: FxPro)

Despite the total market capitalization recovering slightly over the past week, its weak and unstable performance is concerning. This recovery appears very fragile in the absence of significant volume and buyer enthusiasm. The market capitalization has failed to break through the 50-day MA, which is technically seen as a signal dominated by a bear market. This indicates that, although the stock market has risen due to expectations that the Federal Reserve will take a dovish stance, the weakness in the labor market has negatively impacted retail investors, who are the main price drivers, suppressing their risk appetite.

The market sentiment index also reflects this cautious attitude. The index fell into the "fear" range of 44 on Sunday, but rebounded to the "neutral" area of 51 on Monday, indicating that investors are in a wait-and-see mode.

Institutional demand weakens, the altcoin season may soon begin

According to data from CryptoQuant, although the total amount of Bitcoin held by enterprises reached a historic high of 840,000 BTC in August, its growth rate and volume have both fallen to annual lows. This suggests that institutional demand is weakening.

Meanwhile, according to Bloomberg, the altcoin season has begun, but it is limited to those coins that have been included in the reserves of large companies. In the future, another potential catalyst for the altcoin season could be the approval of crypto ETF applications by the U.S. Securities and Exchange Commission (SEC). The SEC is expected to approve around 10 crypto assets' ETF applications, including Dogecoin, Chainlink, Stellar, Bitcoin Cash, Avalanche, Litecoin, Shiba Inu, Polkadot, Solana, and Hedera.

The Rise of Stablecoins and Tether's New "Gold" Direction

The popularity of stablecoins is rising. Stripe CEO Patrick Collison stated that stablecoins offer businesses a faster, cheaper, and more reliable payment method than traditional systems.

In addition, according to the Financial Times in the UK, Tether is planning to purchase gold. Sources from the publication revealed that the USDT stablecoin issuer has been discussing investments in the entire precious metals Supply Chain, including mining, processing, trading, and other links. This strategic move indicates that Tether is seeking to further strengthen its reserves through a broader asset class.

Conclusion

The current Crypto Assets market is at a complex crossroads, with multiple signals contradicting each other. On one hand, the moderate recovery in market capitalization indicates that the market still has inherent resilience, but the lack of strong retail and institutional buying pressure makes its upward momentum appear fragile. Bitcoin's consolidation around the key price level of $111,000 highlights the market's indecision regarding a clear direction. On the other hand, the quiet onset of altcoin season and Tether's strategic investment in gold suggest that subtle changes are occurring in the internal structure of the market and capital flows. This indicates that while overall sentiment is becoming cautious, the narrative of innovation and growth has not faded. The future direction of the market will depend on changes in the macroeconomic environment and the recovery of risk appetite among institutional and retail investors.