Shiba Inu Skyrockets, Is the Bull Market Back?

During Bitcoin's stabilization period, the altcoin season saw a long-lost intense fluctuation.

Tokens with a circulating market value of less than $20 million experienced a three-fold and five-fold increase in just a few days, with some approaching a ten-fold increase. Without any significant developments, ecological breakthroughs, or new institutional participation, prices were driven up in this manner.

This phenomenon has a ready-made explanation: altcoins are high-beta assets, so when Bitcoin rises, altcoins surge even higher. While this statement holds true statistically, it does not provide a complete explanation. High beta can explain why altcoins outperform Bitcoin, but it cannot explain why some have increased in value by tens of times. This multiple comes from another factor.

The current Altcoin Season Index is 34, with BTC dominance at 58.5%. Both numbers simultaneously tell you that this market is still far from a true altcoin season. However, in this market without a true altcoin season, certain tokens are moving at the magnitude typically seen only during an altcoin season.

From December 2024 to April 2026, excluding Bitcoin and Ethereum, the total market value of altcoins plummeted from a peak of approximately $1.16 trillion to around $700 billion, evaporating nearly 40%. When the market value shrinks low enough, the rules of the game change, and the price is no longer determined by market consensus but by who holds enough chips.

This is a vulnerability created by overselling, not a signal sent out by a bull market.

Altcoins Have Truly Dropped Too Much

In the blockchain space, there is a concept of a 51% attack, where controlling over half of the network's hash rate allows one to manipulate records, double-spend coins, and rewrite history. The capital version of this concept is simpler, requiring no technical expertise or hash rate, just money. In this round, the altcoin market saw nearly a 40% decrease in market value, reducing the barrier to entry by 40% year-on-year.

As of early April 2026, the total market value of altcoins was approximately $700 billion, down about 40% from the peak of around $1.16 trillion in December 2024. If measured until the end of 2025, the decline is about 44%. While the two measurements have different time points, the direction is consistent: the overall size of this market has been almost halved.

What does halving in market value mean? A $10 million asset in a $500 million market cap market represents 2% of the circulating supply, while in a market cap of $50 million, it represents 20%. The threshold has decreased tenfold, but the amount of money remains the same. After overselling, the cost of controlling the market becomes calculable. And if it's calculable, it's executable.

In the past few days, the sharp rise of the SIREN token has provided an analysis case study. SIREN experienced a rapid surge in late March, marking a notable uptrend. On March 24, on-chain analyst EmberCN issued a warning: an entity may have controlled up to 88% of SIREN's circulating supply, equivalent to around $1.8 billion at the time's price. As the news spread, SIREN plummeted from $2.56 to $0.79 on the same day, a drop of over 70%. During the rapid price plunge, almost no one could exit at a reasonable price as that price was never determined by the market.

A conservative estimate suggests that 48 wallets hold approximately 66.5% of the circulating chips. Even based on this lower bound, a very limited set of addresses already has the structural conditions to control the price trajectory. From the moment price formation began, the symmetry of this game was already broken. Retail investors, holding money they thought was participating in free-market trading, entered a container with a pre-set exit path.

SIREN is not an isolated case, nor a black swan; it is the structural norm of oversold altcoins. The deeper the plunge, the less money needed, and the easier it is to hijack. Overselling is not a discount; it is fragility. With this round of overall market cap decline of 40%, this fragility has systematically expanded across the entire market.

Shorts as Fuel

If the story stopped here, the logic would be unidirectional: the big players lock in profits, drive up the price, retail investors buy in, followed by a crash. However, the market of microcap altcoins usually has another layer of structure on top, where shorts become the kindling.

During SIREN's rapid price surge, the funding rate reached -0.2989% every 8 hours, implying an annualized rate of about -328%. In essence, shorting SIREN and holding a position required shorts to pay about 0.3% of the principal every 8 hours to longs. Holding the position for a month, this fee alone could devour over 25% of the principal, not to mention the paper losses from price appreciation.

This figure is not uncommon in the small-cap altcoin market. Some tokens have seen funding rates drop to as low as -0.4579% every 8 hours, implying an annualized rate of around -501%. At this level, shorts face not the risk of being wrong in direction but the certainty of being slowly ground down by a machine. Even if the final direction turns out to be correct, they are exhausted long before the day of vindication arrives.

When you see a meme coin pump 80% and decide to short it for a retracement, each of your short positions incurs an interest payment to the long side. At the same time, once the price continues to rise and hits your liquidation price, the system automatically executes a market order to close your position, which, in turn, further drives up the price due to the forced buy liquidation.

The cascading effect of forced liquidations operates in this manner. As the price goes up, short positions face paper losses, the losses hit the liquidation threshold, the system automatically market buys to close the position, this buy order further boosts the price, triggering more short positions, and initiating a new round of buy liquidations. In a low-liquidity small-cap market, each order can fuel larger price movements, and the efficiency of this cascading effect is much higher compared to high-cap assets.

There is an often overlooked asymmetry here. Someone who sees a token surge 90% and decides to short it usually believes they are making a probabilistically sound judgment: "After such a big rise, there must be a pullback." However, in a market highly concentrated with locked-in positions, this judgment must not only battle price movement but also contend with a 0.3% funding cost every 8 hours and the chain reaction of passive buy orders triggered after hitting the liquidation price. This game was asymmetrical from the start.

An extreme negative funding rate is the gauge on this machine's dashboard. Shorts have been accumulated, ammunition is loaded, and at this moment, the acceleration is pushing the price higher fast. The group standing on the other side only has two choices: get liquidated and exit, or chase the price higher. Both choices add fuel to the price. This is not a market-driven uptrend; it is a unidirectional consumption designed structure.

A Market without New Money

On BSC Chain, weekly DEX trading volume increased by 97% YoY, the altcoin season index stands at 34/100, and BTC dominance is at 58.5%. These three numbers can coexist while also being contradictory.

The on-chain activity is indeed scorching, but the latter two numbers tell you that this market is still in the "Bitcoin season," where less than half of the mainstream altcoins have outperformed Bitcoin, the dominant funds are highly concentrated in Bitcoin, far from being widely diversified. However, the three numbers all point to the same reality: existing funds are circulating rapidly, not new money pouring in. The excitement is real, but excitement does not equate to expansion.

The movements of institutional funds provide evidence. In early April, the Solana ETF saw net inflows return to zero on a single day after recording a net outflow of $6.2 million on March 30, with the XRP ETF continuously experiencing net outflows at the beginning of the month, seeing only a tiny inflow of about $64,600 on April 2, and although the Ethereum ETF witnessed a $120 million net inflow on April 6, the day prior had seen an outflow of $71 million. The overall pattern of institutional funds in the altcoin direction is one of caution rather than rotation.

Compared to the real altcoin season in 2021, the difference is structural. That round from the beginning of the year to May saw BTC dominance drop from over 70% to below 40%, hitting a low of around 39%. The rotation of funds between Bitcoin and altcoins was clearly visible, with the altcoin season index surpassing 90 at one point. It was a comprehensive expansion driven by macro liquidity flooding, the lingering heat of DeFi summer, retail FOMO entering massively, stablecoin supply rapidly expanding during the same period, and incremental funds continuously flowing into the entire ecosystem. Today's 34 and 58.5% paint a different picture, with the engine just starting to warm up and still far from running at full speed.

There is also a unique variable in this round of the cycle. The institutional funds entering the market through ETFs follow internal logic of asset allocation, not the emotional logic of the crypto market. Institutions are making adjustments like "adjust Bitcoin exposure to X%," not "the altcoin season is coming, increase exposure to altcoins." This batch of funds structurally will not spontaneously rotate into the altcoin market unless a clear order is given. This is the most fundamental structural difference between 2021 and 2026. The money that came in 2021 included a large amount of retail funds that followed the hot trends, whereas today, institutional funds are anchor-based, following a fixed path and not drifting with market sentiment.

The on-chain transaction volume surge of 97% is real, but a market without new money is a zero-sum game. Every winner's gain corresponds to another player's loss, and the total amount in the pool remains the same. Stock game theory may not necessarily collapse, but it determines the structure of the game. The excitement belongs only to those who are already in, who already have chips. Latecomers typically use their own money to complete the final mile of others' profit-taking.

Epilogue

Going back to that set of data from the beginning, Bitcoin rose by about 0.85% in four days, while several small-cap tokens surged several times in the same period. Now you have a framework. Bitcoin's rise is one thing; the macro environment is catching its breath, institutional funds are testing the waters, and the market is waiting for the next clear signal. The sudden surge of altcoins is another matter; the low market cap after the oversell created structural vulnerabilities, with a small amount of capital levering the price in thin liquidity containers, and extreme negative funding rates turning shorts into longs' fuel. Both events happening simultaneously does not mean they are telling the same story.

The altcoin season index is at 34, BTC dominance is at 58.5%. By 2021 standards, this machine hasn't even completed its warm-up program. BTC dominance needs to drop from 58% to around 39% as it did that year, institutional funds need to expand from "Bitcoin allocation" to "crypto asset portfolio allocation," incremental funds need to keep flowing in instead of cashing out at the peak. None of these can be solved by a single circuit breaker.

There are two kinds of people in this world: those who know what this machine is for, and those who are the fuel for it to operate.

Bitcoin's rise is a signal, while the frenzy of altcoins is just an echo. Differentiating between the two is key to making a decision in this market that is not predetermined by the machine.