Wintermute: Market Sentiment Recovers, Policy And Political Factors Set To Drive Volatility
In Brief
Wintermute reports that crypto market sentiment has improved with positions reset and selective risk-taking returning, but broad altcoin rallies remain unlikely until Bitcoin approaches its ATHs.
Algorithmic trading firm Wintermute released its latest cryptocurrency market update, noting that market sentiment has improved as positions reset and selective risk-taking returns. According to the report, Bitcoin is likely to approach its all-time highs before altcoins experience a broader rally and market breadth expands. Upcoming US regulatory and political developments are expected to be the next drivers of volatility.
The report highlights that this week marked a shift in market tone rather than direction. Following the October sell-off, positions have largely reset, and although cryptocurrency continues to lag broader risk assets, overall sentiment appears less fragile.
Headlines contributed to this improvement: President Trump’s proposed $2,000 stimulus via tariff rebates briefly boosted risk appetite over the weekend before being reframed as a tax break, yet it highlighted that fiscal support remains in play. Combined with renewed optimism regarding the potential end of the US government shutdown and softer macroeconomic data, traders found reasons to selectively increase exposure. Despite these shifts, digital assets remain the weakest-performing cross-asset class, indicating that sentiment may be recovering but capital flows have yet to fully follow.
Bitcoin has remained around $105,000–$107,000, while Ethereum trades near $3,700, showing resilience despite ongoing exchange-traded fund (ETF) outflows.
Altcoins experienced a bounce into Monday, though the recovery was uneven. The GMCI-30 index rose 0.7% over the week, with gains concentrated in DePIN (+22%), Layer 2s (+13%), mid-cap tokens (+15%), AI-related projects (+9.6%), DeFi (+8.8%), and utilities (+5.9%), while Layer 1s fell slightly (-1%) and meme tokens gained 4.6%.
The rotation reflects cautious risk appetite, with investors adding exposure incrementally. Most of the GMCI-30 gains were driven by weekend recovery rather than a fundamental shift in capital flows.
Market breadth remains narrow, with a few leading assets such as Filecoin, Arweave, and select others accounting for most performance. Narrative-driven breakouts remain isolated, fragile, and prone to fading without broader support.
Wintermute Highlights Narrow Market Recovery, Major Cryptos Must Lead Before Altcoins Rally
Wintermute further noted that the macroeconomic environment remains supportive. Interest rate cuts are underway, quantitative tightening has concluded, and global easing continues. The SOFR rate is declining, broadly reflecting monetary policy trends with some delay. Yet cryptocurrency has not mirrored other risk assets, with speculative layers thinning, rallies remaining narrow and rotational, and capital favoring major tokens over smaller, peripheral assets.
Based on current trading levels, a broad altcoin season appears unlikely in the near term. Historically, altcoins perform better when Bitcoin is closer to its all-time highs, as wealth spillover supports their gains. When BTC sits 10–20% below its ATH, it outperforms altcoins approximately 54% of the time; at levels near $100,000, this probability rises to about 58%.
This dynamic explains the fragility of last week’s rallies in assets like FIL, ICP, and FET, which have already lost momentum as the market fails to confirm a sustained trend from Bitcoin.
That said, select blue-chip altcoins with identifiable catalysts, including HYPE, ENA, and UNI, continue to show relative strength, supported by clearer US regulatory guidance and expectations of domestic market reopening.
Broader altcoin performance remains uneven, resembling short bursts of momentum with limited follow-through unless Bitcoin leads. A sustained altcoin rally is unlikely until major tokens regain dominance.
Overall, positioning has reset, sentiment has improved, and the market appears more balanced following weeks of volatility.
Cryptocurrency remains the weakest-performing asset class, but the tone has shifted, with selective risk returning and October’s sell-off largely behind. The recent gains in DePIN, Layer 2 networks, and AI tokens reflect measured investor appetite, though market breadth remains narrow and narratives remain fragile. For the next phase, major cryptocurrencies must lead, as historical patterns suggest altcoins follow only when Bitcoin approaches its highs.
At current levels near $105,000, approximately 16% below the all-time high, this rotation has not yet occurred. The market appears poised for a constructive phase, supported by a cleaner structure, favorable macro conditions, and improving sentiment, with upcoming US regulatory and political developments likely to drive the next wave of volatility rather than changes in positioning.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
