The AI-led rally on Wall Street extended into Asia, with semiconductor stocks driving another leg higher in global equities. Risk-on sentiment remains intact, which could keep stocks in recovery mode and provide a supportive backdrop for digital assets. However, the crypto market still appears to be searching for one final leg lower, meaning short-term pullbacks in equities cannot be ruled out. Once cryptocurrencies complete this final corrective move, stocks could continue extending their gains, while crypto may begin a higher-degree recovery.
From a technical perspective, the Crypto TOTAL Market Cap chart still appears to be trading in the final stages of Wave 5. Nevertheless, traders should remain cautious, as the decline could still extend toward the $1.9T area within subwave (5) of 5 before a more durable bottom is established. At the same time, keep an eye on the developing wedge pattern, which may already find support around the $2.0T level and could serve as an early indication that selling pressure is fading.
The current weakness across the crypto market may continue to be driven primarily by Bitcoin (BTC.X) and its declining dominance, while several altcoins are beginning to display early signs of bottoming. Bitcoin Dominance (BTC.D) continues to favor additional downside within Wave 5, suggesting that Bitcoin could underperform parts of the broader cryptocurrency market in the near term.
Meanwhile, many leading altcoins are approaching the final stages of their corrective structures. Litecoin (LTC-X), for example, may already be carving out a bottom, although some altcoins could still require one more leg lower before completing their corrections. Altcoin Dominance (OTHERS.D) may have already completed its projected ABC correction within higher-degree Wave iv, opening the door for a rally into Wave v.
This growing divergence between Bitcoin and altcoins suggests that capital could gradually rotate into stronger projects first, while weaker cryptocurrencies may continue to lag behind. As always, the crypto market remains highly selective, with individual coins following different technical structures and market cycles. This creates opportunities even while the broader market remains in a corrective phase.
That said, a more meaningful and broad-based altcoin rally is likely to develop only after Bitcoin finds at least temporary support and begins a larger corrective recovery. Until then, traders should remain patient, focus on relative strength, and continue monitoring key support levels for confirmation that the next recovery phase is underway.
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