Original title: (WOO X Research: BTC skyrockets, is there an altcoin season this round?)
Original source: WOO X Research
On November 13, Bitcoin surged to 92,000 USD, and the total market value of cryptocurrencies reached 3.2 trillion USD, both breaking historical highs. This round only saw Bitcoin and meme coins celebrating, while altcoins did not rise at all.
The reasons for the poor performance of altcoins can be summarized in the following two points:
· The market does not buy into the token economic model of new projects with low MC and high FDV, and instead invests in meme coins
· No killer applications have emerged this round
The following chart shows Bitcoin's market share BTC.D, which currently stands at 61%, the highest in three and a half years. Will BTC.D continue to rise? Can the aforementioned reasons for the poor performance be resolved in this cycle? Is there still an altcoin season? Let's take a look with WOO X Research.
Reference: Trading View
The logic of altcoin price increase
We are currently in the early stage of a rate cut cycle, which means the US is releasing more liquidity into the risk market. The flow of funds is directional; initially, funds overflow from the traditional real estate market to the stock market, and when the stock market reaches a certain market value, excess funds will flow into mainstream crypto assets (BTC/ETH/SOL). When the mainstream crypto assets rise and meet the market value standard, funds will flow into the smaller altcoin market, thus driving up the prices of altcoins.
One can imagine that the aforementioned asset classes are like bowls of water arranged from large to small. When enough water spills down to fill the upper bowls, the water will naturally overflow into the smaller bowls below. This flow of funds indicates that money will follow the characteristics of market liquidity, flowing from relatively low-risk and larger assets to higher-risk and smaller assets.
Therefore, the prerequisite for altcoin price increases is: Bitcoin must rise first, until it can’t rise anymore, and funds are willing to leave Bitcoin to purchase altcoins.
Reference: @MustStopMurad
Current market cycle: The eve of altcoin explosion
The following chart shows the changes in the total market cap of the cryptocurrency market excluding Bitcoin and Ethereum (Total 3) since the beginning of this year. This chart also represents whether altcoins can explode. It can be seen that from April to September this year, the overall market cap of altcoins showed a significant downward trend, dropping from 75 billion USD to 55 billion USD. However, starting from September, we can see in the chart that the market cap stopped declining and began to rise, increasing from 55 billion USD to the range of 60 to 65 billion USD, breaking the downward trend, which also indicates that we have passed the lowest point of altcoin performance.
As mentioned earlier, BTC.D is currently close to 61%, which is a new high for this cycle and the highest in three and a half years. Based on past experience, the start of altcoin season is always initiated by Bitcoin rising and siphoning off altcoins, causing BTC.D to soar. Once it rises to a certain level, BTC.D will drop from the peak to the range of 50% to 55%, allowing altcoins to catch up. We are currently in the cycle of BTC.D soaring to its peak.
The current total market cap of cryptocurrencies is approximately 3.2 trillion USD. If the total market cap remains unchanged, and BTC.D drops from 61% to 50%, it is expected that 32 billion USD will be injected into the altcoin market, which also means Total 2 (excluding Bitcoin's market cap) will grow by 28%!
* Calculation formula: [3.2T*(61-50%)] / [3.2T*(1-61%)] = 28%
Future outlook from a financing perspective: Focus on DeFi and applications
We have just assessed the current market position from various market cap data, while the future outlook needs to reference the current financing situation, as financing represents confidence in the cryptocurrency market over the next 6 to 12 months and is a leading indicator of the development of altcoins in this cycle.
In the past three months, the financing amount has revolved around infrastructure, completing a total of 870 million USD in financing. Infrastructure is a key track in the financing landscape of the cryptocurrency market, as blockchain is still in the early stages of development, investors are quite interested in positioning themselves in building infrastructure. We can focus on the second and third tracks, which are DeFi and others (usually referring to application DApps), where the former has a total financing amount of 430 million USD, and the latter is 310 million USD, significantly outpacing other tracks.
The essence of financing is to invest in early-stage potential projects. While everyone criticizes the poor price performance of altcoins, investment institutions are beginning to lay out early-stage DeFi and application projects, expecting a new round of explosion in 2025.
Reference: Rootdata
This article comes from a submission and does not represent the views of BlockBeats.
