Altcoins Need to Break Free from Bitcoin Reliance to Kickstart Altseason

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As a seasoned crypto investor with a decade of experience under my belt, I can’t help but feel a mix of anticipation and caution as we navigate the current market landscape. While it’s true that altcoins have shown impressive strength this year, I believe we’re still waiting for the much-anticipated altseason to truly kick off.

Despite altcoins demonstrating significant growth this year in 2024, it appears that the anticipated altseason, which could lead to a massive surge in this sector, has not yet commenced. CryptoQuant CEO Ki Young Ju provides insights into why the altseason delay might be occurring, suggesting that it may become independent from the Bitcoin price movement and Bitcoin’s market dominance. Here are the current stats for Bitcoin:

In this cycle, it appears that the primary drivers behind Bitcoin’s price surge are institutional investors and spot ETFs, whereas in the past it was mainly individual traders using cryptocurrency exchanges.

It was observed by Ju that institutional investors and ETF purchasers generally don’t switch their investments from Bitcoin to other cryptocurrencies (altcoins). Furthermore, since they function outside of crypto exchanges, it proves challenging for them to swap funds between Bitcoin and altcoins via Over-the-Counter (OTC) trades.

In essence, while large altcoins might receive funding from institutional investors via ETFs and similar instruments, it’s the individual users of cryptocurrency exchanges who continue to provide a significant amount of capital for lesser-known altcoins, as pointed out.

Altcoins Rely on Fresh Capital on Crypto Exchanges

To surpass their highest-ever market values, as Ju explained, it’s crucial that altcoins receive a substantial increase in new investment on trading platforms. Yet, the current total market value of altcoins is still below its all-time peak, indicating insufficient fresh liquidity from exchange users.

Ju also suggested that if retail investors return to Bitcoin, this could reignite exchange user activity and potentially trigger an altcoin season. However, he emphasized that future Bitcoin growth is likely to come from institutional investments, ETFs, and possibly government involvement, rather than from retail traders.

To summarize, Ju suggested that altcoins ought to devise unique approaches for drawing fresh investments, instead of depending on Bitcoin’s progression to fuel their expansion.

Bitcoin Dominance Peaking, When Will Altseason Begin?

According to experts who analyze cryptocurrencies, it’s likely that Bitcoin’s influence over the crypto market may reach its maximum soon, causing investors to shift their funds towards alternative coins (altcoins). This shift could potentially trigger an ‘altseason’, a period of increased activity and price growth for altcoins. Furthermore, analysts are optimistic about Ethereum‘s price reaching a new record high.

Reaching the green line for Bitcoin implies that its market value has grown sufficiently, causing a significant shift of capital towards alternative cryptocurrencies (#altcoins).

Every four years, it’s a sign that triggers before the decrease in Bitcoin’s market dominance, which we often refer to as “altcoin season” here.

— TechDev (@TechDev_52) November 27, 2024

The Total3 Index, which follows the market value of cryptocurrencies other than Bitcoin and Ethereum, has witnessed a substantial increase over the past three weeks, reaching heights not experienced in three years. This upward trend has sparked discussions suggesting that an “altcoin season” might be emerging.

Over the past week, the Total3 Index reached unprecedented peaks in its current cycle, recording its biggest jump since April 2021, amounting to a significant increase of 23.2%. Moreover, the combined market value of these assets is rapidly approaching the $984 billion peak it attained in May 2021.

According to the most recent Bitfinex Alpha analysis, there’s a significant boost in the altcoin market. The experts at Bitfinex attribute this surge to continuous advancements in the regulatory environment.

As a researcher, I find myself reflecting on the recent trends in the cryptocurrency market. Contrary to the general consensus that the peak in April 2022 marked the beginning of the bear market for altcoins, we have now surpassed those levels. This move suggests a shift in investor sentiment and interest, with capital and attention seemingly moving from Bitcoin towards altcoins as retail participation grows. If this trend continues and we manage to climb above these previous highs, it could be an indication of the rotation of speculative capital into altcoins.

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2024-11-27 18:37