Fateful and Tumultuous Altcoin Season

At the end of 2025 and the beginning of 2026, a significant amount of funds can be seen flooding into small-cap stocks. At that time, the Russell 2000 also seemed to have a fighting chance, but recently, in the last week, the net outflow from small-cap stocks reached $837 million, while the week before that, small-cap stocks had hit a record single-week inflow of $1.2 billion.

This significant inflow lasted for four weeks, and the market initially gave the impression that risk appetite finally had a chance to spread beyond the "leading stocks," with funds willing to venture into high-risk but high-yield small-cap stocks. In the crypto space, this phenomenon indicates signs of a revival in altcoin season, but at that time, only small-cap stocks seemed to be ambushed, while altcoins still lacked strength.

As it stands now, even small-cap stocks have shifted from significant inflows to significant outflows, let alone the smaller and less favored altcoins. To put it plainly, if small-cap stocks had a chance to flourish, then altcoins might likely escape stagnation, after all, funds have increased their risk appetite.

Unfortunately, the funds accumulated over the past four weeks are now beginning to withdraw. It is still uncertain whether this withdrawal is continuous; if it is, then it would be even harsher for altcoin season, indicating that the market hasn’t truly entered a stage of spreading risk appetite but merely experienced a brief emotional rotation, with money coming in fast and leaving just as quickly.

My personal view remains that the funds flowing into small-cap stocks are a leading indicator for altcoin season. Only with a recovery in small-caps could altcoins potentially have a chance, while if small-caps continue to experience withdrawals, altcoins can only continue to endure and wait for liquidity.

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