Wintermute: Recovering Market Sentiment, Policy and Political Factors Driving Volatility

by
Alyssa Davidson

Posted: Nov 12, 2025 3:24 AM Updated: Nov 12, 2025 3:24 AM

by well

Correction and fact check date: November 12, 2025, 3:24 AM

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Algorithmic trading firm Wintermute issued its latest cryptocurrency market update, noting that market sentiment has improved with positions being reset and risk taking selectively. According to the report, Bitcoin is likely to reach all-time highs before altcoins experience a broader rally and the market widens. Upcoming regulatory and political developments in the United States are expected to be the next drivers of volatility.

The report emphasizes that this stock price represents a change in market sentiment rather than direction. Positions have been significantly reset since the October sell-off, and while the cryptocurrency continues to lag broader risk assets, overall sentiment appears less fragile.

Headlines contributed to this improvement. President Trump’s proposed $2,000 stimulus package with tariff rebates briefly boosted risk appetite over the weekend before being restructured into tax cuts, but emphasized that fiscal support remains in effect. Combined with renewed optimism about a potential end to the U.S. government shutdown and easing macroeconomic data, traders have found reasons to selectively increase exposure. Despite these changes, digital assets still remain the weakest cross-asset class, indicating that although sentiment is recovering, capital flows are not yet fully keeping pace.

Bitcoin is hovering around $105,000 to $107,000, while Ethereum is trading near $3,700, showing its resilience despite continued exchange-traded fund (ETF) outflows.

Altcoins experienced a rebound on Monday, but the recovery was uneven. The GMCI-30 index is up 0.7% for the week, with gains concentrated in DePIN (+22%), Layer 2 (+13%), mid-cap tokens (+15%), AI-related projects (+9.6%), DeFi (+8.8%), and utilities (+5.9%), with Layer 1 down slightly (-1%) and meme tokens up 4.6%.

The rotation reflects a cautious risk appetite as investors gradually add exposure. Most of the GMCI-30 gains were driven by the weekend recovery rather than fundamental changes in capital flows.

Market breadth remains tight, with Filecoin, Arweave, and a few other major assets accounting for most of the performance. Narrative-driven breakthroughs are isolated, fragile, and likely to disappear without widespread support.

Wintermute highlights the narrow market recovery and the need for major cryptocurrencies to take the lead ahead of the altcoins rally.

Wintermute added that the macroeconomic environment remains favorable. Interest rate cuts are underway, quantitative tightening has concluded, and global easing continues. SOFR rates are falling and broadly reflect monetary policy trends, with some lag. But cryptocurrencies have failed to mirror other risky assets, with speculative layers thinning, rallies narrow and cyclical, and capitalization favoring major tokens over smaller peripheral assets.

Based on current trading levels, it seems unlikely that we will see a widespread altcoin season in the near term. Historically, altcoins have performed better when Bitcoin is near all-time highs as wealth outflows support gains. When BTC is 10-20% below ATH, it outperforms altcoins about 54% of the time. At levels closer to $100,000, this probability increases to about 58%.

This dynamic explains the fragility of last week’s rally in assets such as FIL, ICP and FET, which had already lost momentum as the market failed to confirm Bitcoin’s continued trend.

That said, select blue-chip altcoins with identifiable catalysts, including HYPE, ENA, and UNI, continue to see relative strength, driven by expectations of clearer US regulatory guidance and the reopening of domestic markets.

Broader altcoin performance remains choppy, resembling brief bursts of momentum with limited follow-through unless Bitcoin pulls ahead. A sustained altcoin rally is unlikely until a major token regains dominance.

Overall, positioning has been reset, sentiment has improved and the market appears more balanced after several weeks of volatility.

Cryptocurrencies remain the worst-performing asset class, but the mood has changed, with selective risk returning and the October sell-off lagging significantly. The recent rise in DePIN, layer 2 networks and AI tokens reflects measured investor preferences, but market breadth remains tight and the narrative remains weak. In the next phase, major cryptocurrencies should lead the way. Historical patterns show that only when Bitcoin reaches record highs do altcoins follow.

This rotation has yet to occur at levels close to $105,000, about 16% below the current high. The market appears poised for a constructive phase, aided by cleaner structures, favorable macro conditions and improved sentiment. Upcoming regulatory and political developments in the United States are likely to drive the next round of volatility rather than changes in positioning.

As MPost’s resident journalist, Alisa specializes in the broad areas of cryptocurrencies, zero-knowledge proofs, investing, and Web3. With a keen eye for new trends and technologies, she provides comprehensive coverage to inform and engage readers about the ever-evolving digital financial landscape.

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