How is the season of altcoins formed?

In fact, the formation of the altcoin season is often closely related to the performance of Bitcoin (commonly known as 'big cake') in the market.

When the price of Bitcoin rises to a higher level, investors' enthusiasm for investing in Bitcoin gradually decreases, and funds begin to flow out of the Bitcoin market. These outflowing funds will then shift towards other mainstream cryptocurrencies such as Ethereum, which in turn drives the prices of these mainstream coins to rise.

As the prices of mainstream coins like Ethereum also gradually climb to high points, funds will further flow into relatively smaller altcoins. This is because the market capitalization of altcoins is smaller, so only a small amount of investment is needed to cause a significant increase in the prices of altcoins.

Eventually, when Bitcoin's market capitalization approaches about half of the peak of the entire bull market, the overall market sentiment will begin to weaken, thus entering a bear market phase. During this stage, the price of Bitcoin typically experiences a retracement of about 70%.

When the bear market is at its bottom, the main capital in the market will begin to accumulate positions. Once the main capital has accumulated enough chips, the price of Bitcoin will start to rise again, thereby initiating a new round of bull market.

This process fully demonstrates the cyclical volatility characteristics of the cryptocurrency market.

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