The price of Bitcoin has approached 100,000, and its market cap share has risen to around 60%, while altcoins remain at the bottom, unmoving. Is there still hope for altcoins?
My view presented in (The Ordinary Person's Cryptocurrency Trading Manual) is that the altcoin season is the result of capital rotation in the later stages of a bull market, generally occurring after Bitcoin experiences continuous large increases and capital overflows.
History always tends to repeat itself; let's take a look at history first.
On January 3, 2021, Bitcoin's market cap share reached 73.61%.
On January 8, 2021, the price of Bitcoin peaked at 42,000, rising more than tenfold from the bottom of 3,782 over 301 days.
At this time, altcoins are like they are now, lying at the bottom. Looking at the weekly chart of altcoin market cap, as shown below:
In January 2021, the overall market cap of altcoins was at a historical low. This means that while Bitcoin surged tenfold, the overall market cap of altcoins not only did not rise but also experienced a significant drop, indicating that altcoins were being drained, and funds flowed into Bitcoin.
When did this change occur?
Time returns again to January 8, 2021, when the price of Bitcoin approached 42,000, followed by a 31% pullback lasting until January 22, when the pullback bottomed out (14 days).
At the same time, let's look at the situation with altcoins.
The total market cap of altcoins rose rapidly after January 8, 2021, meaning when Bitcoin experienced significant pullbacks at its peak, altcoins did not drop but instead rose, indicating that funds began flowing from Bitcoin to altcoins.
Then, let's see how long the altcoins have surged?
The total market cap of altcoins surged rapidly for over 130 days after hitting the bottom in January 2021, which is more than 4 months. On May 19, 2021, the total market cap of altcoins reached its highest point before experiencing significant pullbacks and high-level fluctuations. (To this day, the total market cap of altcoins has not exceeded this peak.)
After looking at the 31% pullback of Bitcoin, how long until it peaks?
Bitcoin peaked on April 14, 2021 (the first major peak), 82 days after the first 31% pullback, which is about 3 months, and there were also two significant pullbacks in between, one of 26.28% and another of 18.46%.
This indicates several issues:
1. The start time of altcoins is roughly around the time Bitcoin experiences its first major pullback after a peak.
2. The start time of altcoins is far later than Bitcoin; the last round of Bitcoin surged tenfold before altcoins started.
3. The surge speed of altcoins after they start is very fast, even if Bitcoin has significant pullbacks in between, it does not affect the surge speed of altcoins, as can be seen from the steepness of the altcoin market cap K-line.
4. Altcoins peak later than Bitcoin, meaning after Bitcoin peaks, altcoins continue to surge wildly for another month before peaking.
History is similar but not identical. Currently, altcoins are lying at the bottom while Bitcoin is surging forward. Will the altcoin season come again? Let time give us the answer.
