ENA and PUMP Lead Altcoin Rally as Broad Crypto Market Booms Become Unlikely

Author: Nancy, PANews

Following the strong rebound of Bitcoin and Ethereum, the altcoin market has also heated up, with some top-performing tokens significantly outperforming the market and even reaching new highs.

While the return of funds and a rebound in risk appetite are sending positive signals, it may be too early to say that the altcoin season has fully begun. More importantly, even if the altcoin season does return, the kind of broad-based rally of the past is unlikely to reappear.

Altcoin market capitalization returns to $1 trillion, with a few tokens outperforming the broader market.

Since Bitcoin's recent strong rebound, the long-dormant altcoin market has regained attention, with both market size and trading activity showing a significant recovery.

According to CoinGecko data, since August 19, the total market capitalization of altcoins has increased by more than $250 billion, and has now risen back to approximately $1.13 trillion. Meanwhile, CoinGlass data shows that daily trading volume of altcoins also rose during the same period, from approximately $86.23 billion to $132.43 billion, an increase of approximately 53.6%.

It's evident that funds are flowing back into the altcoin market, with market activity showing a significant improvement compared to before. CryptoQuant analyst Darkfost recently revealed that 56% of Binance-listed altcoins have now climbed back above the key technical indicator of the 200-day moving average (200-DMA), suggesting the market may be entering a new cycle.

With market risk appetite recovering, many altcoins have recently seen significant price increases, with some even outperforming the broader market.

According to CoinGecko data, among the top 100 tokens by market capitalization, the top 30 gainers over the past 7 days have seen an average increase of over 34.9%, outperforming Bitcoin and Ethereum during the same period. ENA, PUMP, ZEC, and AAVE stood out, rising by 98%, 80.5%, 69.7%, and 60.7% respectively.

The rise of these strong cryptocurrencies is driven by both the overall recovery in market sentiment and the improvement in the fundamentals of the projects themselves, as well as positive events.

Taking ENA as an example, its recent surge was driven by factors such as Ethena's $1 billion FalconX funding arrangement and BitMEX co-founder Arthur Hayes' public bullish stance and purchase; PUMP was supported by factors such as improved protocol revenue and token burning ratio, product upgrades such as the BOOST model and Allout Rewards, and the gradual digestion of the pressure from previously large token unlocks by the market; AAVE's rise is related to factors such as the recovery of protocol liquidity, the growth of V4 deposit size, and improved expectations for regulatory compliance.

It's worth noting that only ZEC and HYPE recently hit new highs, gaining higher market premiums. ZEC's rise was driven by factors such as Grayscale's submission of revised Zcash ETF documents, DCG's discussion of injecting approximately 200,000 ZEC into the relevant fund, and the privacy narrative; HYPE was influenced by factors such as continued protocol revenue and buyback mechanisms, Trump's remarks at the White House crypto conference, and expectations of an AQAv2 upgrade.

In terms of sector distribution, the tokens with the largest gains mainly came from areas such as privacy, DeFi, memes, payments, and trading, but the number of strong assets involved was relatively limited; in contrast, the gains in sectors such as public chains, RWA, and oracles were relatively moderate.

Among them, the privacy sector saw the highest average increase, but this performance was mainly driven by ZEC as a single asset, and the entire privacy sector did not experience a broad-based rally. The DeFi sector is also undergoing a repricing process, with assets possessing practical applications, protocol revenue potential, or expected fundamental improvements gaining attention. These include ENA, AAVE, UNI, MORPHO, and SKY, which have seen an average increase of approximately 51.5% over the past seven days. Although ENA's 98% increase significantly raised the sector average, excluding it, the other four DeFi tokens still saw an average increase of approximately 39.9%.

The meme sector has also performed strongly, with the four related tokens averaging a 46.75% increase over the past seven days. Specifically, PUMP rose 80.5%, PEPE rose 53.9%, and DOGE and SHIB rose 30.9% and 21.7% respectively. The collective rise of meme tokens is often seen as a signal of increased market risk appetite, but the continued rise of this sector depends more on whether incremental funds can continue to flow in and whether overall market risk appetite improves further.

Overall, this round of altcoin gains includes both a technical correction after a sharp drop and a shift in market sentiment from defensive to offensive. However, funds are increasingly flowing into assets with high beta, strong narratives, and clear catalysts, rather than a broad allocation.

Traditional rotation logic is failing, and the era of broad-based gains may be over.

Although the altcoin market has rebounded significantly recently, it is still far from a true altcoin season frenzy, and the traditional rotation logic is failing.

CoinGlass data shows that the altcoin seasonal index has rebounded to 48, recovering from a two-month low, but remains significantly below 75, which is generally considered the confirmation line for the start of an altcoin season. This indicator primarily measures the relative performance of altcoins in the crypto market. Only when most of the top 100 altcoins by market capitalization have outperformed Bitcoin over the past 90 days is the market closer to a typical altcoin trend. The current index hovering around 50 indicates that the market is still in a transitional and volatile period, and funds have not yet fully flowed out of altcoins in large quantities.

Furthermore, Bitcoin's dominance remains high. CoinGecko data shows that Bitcoin's market share is currently as high as 57.6%, while excluding Ethereum and stablecoins, the market share of other altcoins is only 20.64%, showing no significant change recently. This confirms that the recent rise in altcoins is more due to certain tokens attracting funds than a general spillover of market liquidity.

Historically, a typical altcoin season often occurs after Bitcoin experiences a significant price surge and then enters a period of high-level consolidation or fluctuation. As Bitcoin's upward momentum slows, some funds begin to seek higher-yielding assets, shifting towards Ethereum, large-cap altcoins, and small- to mid-cap tokens. Currently, Bitcoin's own future trend still requires further confirmation. In the early stages of a market rally, funds tend to concentrate primarily on Bitcoin, often exhibiting a "vampire effect," making it difficult for most altcoins to secure sustained funding during this phase.

More noteworthy is the shift in the funding structure of this cycle. With Wall Street institutions entering the market through channels such as Bitcoin and Ethereum spot ETFs and crypto treasuries, the traditional rotation pattern of "funds gradually spreading to altcoins after Bitcoin's rise" is being challenged. Compared to highly volatile risky tokens, institutional funds typically tend to flow towards more liquid and certain top-tier assets.

Meanwhile, the number of altcoins has exploded in recent years, with a large number of new tokens constantly entering the market, further fragmenting the limited market liquidity. Without a corresponding increase in new market funds, even if funds begin to flow into altcoins, it will be difficult to replicate the widespread "all-coins soaring" market conditions of previous cycles.

CryptoQuant founder Ki Young Ju previously pointed out that the traditional altcoin rotation effect has basically disappeared, and since 2021, the trading volume of altcoins in BTC trading pairs has shrunk significantly.

In his view, the era of making money solely through token issuance based on narratives is over. Altcoins are not dead, but only projects with real business and actual revenue are worth holding in the long term. He specifically mentioned three types of projects: First, global internet companies with a tokenized market layer, such as Binance's BNB and Telegram's TON. These projects provide ecosystem exposure in the form of tokens, which is more feasible than equity tokenization. Second, DeFi protocols with real revenue, such as high-quality decentralized exchanges like Hyperliquid, which still have significant upside potential provided the founders are trustworthy and the governance respects token holders. Third, projects that align with global financial trends, including stablecoins, RWA, and tokenized stocks.

In other words, the altcoin season may still arrive in the future, but the era of "everything goes up" may be over. Instead, a more selective rotation will take place. Going forward, whether funds can continue to flow in is only a prerequisite for the start of a market rally. What truly determines whether a token can weather market cycles and its valuation is the project's own fundamentals, actual revenue generation capabilities, and the sustainability of its narrative.