As Bitcoin (BTC) attempts to take control of the $100,000 price level, altcoins have an opportunity for stronger growth. This is a common phenomenon in the cryptocurrency market: when BTC rises, most altcoins hold their value and vice versa. This reflects the capital rotation rule in the crypto market.
Source: Blockchain Center
The altcoin season index has shown that the market has been in an altcoin season for nearly two weeks, however, at the time of writing, this index has dropped to 71.
However, this does not mean that the cycle has ended and it's time to sell – far from it.
Stablecoins – An essential component of the crypto ecosystem
Stablecoins play an important role in the cryptocurrency ecosystem. They provide a safe haven against volatility, increase market liquidity, and support DeFi activities. A high inflow of stablecoins into exchanges is a positive signal, indicating that buying power is strengthening.
Source: CryptoQuant
For example, Tether (USDT) reserves on exchanges have surged in the past three months.
Looking back at the 2020-2021 period, Tether reserves – one of the most popular stablecoins – increased coinciding with when the market entered a true altcoin season. The issuance of stablecoins and their transfer from treasury to centralized exchanges not only enhanced liquidity but also facilitated large transactions – serving as 'ammunition' for larger investors.
Source: CryptoQuant
The increase in reserves in February 2021 has similarities with the trend over the past two months, and the altcoin season may not have arrived yet. In the previous cycle, this occurred in May and November 2021. This time, we may have to wait until Q2 and Q4 of 2025 to witness similar explosive growth.
Market cap target for 2025
From the peak in 2018, the altcoin market cap (excluding ETH and BTC) reached a 223.6% Fib extension level, equivalent to $1.12 trillion in 2021. Similarly, with data from the 2021 bull run, Bitcoin Magazine predicts that the market cap target for 2025 at the 223.6% Fib extension level will be $3.47 trillion.
TOTAL3 Weekly Chart | Source: TradingView
If the previous cycle repeats, the altcoin market cap could reach this level within the next 10 months. After the tax season in the US ends in April, any tax-related selling pressure is likely to ease, allowing investors to return to the market and push prices up in the early summer months.
The saying 'sell in May and go away' also applies to the crypto market. However, one should not overly rely on historical evidence as each summer brings different results. Investors should plan to sell a portion of their assets in May and November while closely monitoring long-term trends.
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