Despite many negative geopolitical developments, the decline in altcoin market capitalization started to slow from the first week of March. Additionally, the newly released PMI index has once again raised hopes that altcoins will recover soon.
However, any recovery could face significant challenges as the proportion of altcoins trading near all-time lows continues to increase.
Why can PMI reports affect capital inflows into the altcoin market?
Positive macroeconomic signals have emerged, providing renewed optimism. The US ISM manufacturing PMI remained above the benchmark 50 for the second consecutive month.
The ISM Manufacturing PMI reflects a survey of business conditions from purchasing managers. This helps assess whether U.S. manufacturing is expanding or contracting.
Specifically, the PMI for February 2026 reached 52.4. Although it was slightly lower than January’s 52.6, it was higher than the expected 51.8.
Historical data shows that when the ISM PMI exceeds 50, indicating economic expansion, it often coincides with strong gains in Bitcoin and altcoins.
Analyst Ash Krypto explained that when the PMI exceeds 50, the U.S. economy enters an expansionary phase. Corporate profits will increase. Household income will improve.
Personal consumption will accelerate. Investors’ risk appetite will strengthen.
“If ISM remains above 50 for a few more months, the crypto winter could end quickly,” said Ash Crypto.
Analysts expect the ISM Manufacturing PMI to remain above 50 for the second consecutive month, indicating the beginning of a new economic cycle in the US. This environment creates favorable conditions for capital to flow into high-risk assets such as cryptocurrencies.
Analyst Matthew Hyland pointed out that a combination of PMI data and historical models confirmed the breakout signal of altcoin dominance.
The rise in PMI, along with a recovery in the monthly MACD-H indicator and a break from the downward wedge pattern in altcoin dominance, suggests a potential altcoin season scenario in 2026.
38% of altcoins are trading near all-time lows
A recent report by CryptoQuant analysts reflects a still bleak outlook for altcoins.
CryptoQuant analyst Dirkforst said that about 38% of altcoins are trading near all-time lows. This is the lowest level in the current cycle and appears to be even worse than the period immediately following the FTX collapse.
“This chart perfectly illustrates the current state of altcoins. Investors remain cautious and continue to lose interest in altcoins,” Dirkforst explained.
But he added that a serious deterioration in the situation could create an environment where opportunities begin to emerge.
A recent report by BeInCrypto highlighted additional signals that suggest a potential recovery for altcoins in March. However, the glut of altcoins combined with tight liquidity conditions could limit the scope for a rebound.
