Market expert Lark Davis recently stated on social media that despite the broader cryptocurrency market facing short-term adjustments and challenges, the anticipated altcoin season is far from over.
Davis believes there are significant opportunities for altcoins in the future, especially as their total market capitalization (excluding Bitcoin and Ethereum) hovers around $1.05 trillion.
Key factors for the upcoming altcoin season
Experts point out that the current market capitalization of altcoins is nearing the previous high of $1.13 trillion set in November 2021. He recalls a similar situation in February 2021 when the market cap of altcoins tested the highs of January 2018 before breaking through.
This breakout caused the market capitalization of altcoins to soar from $360 billion in February 2021 to $1.13 trillion in November 2021, an increase of over 200%. Davis firmly believes that once the market cap of altcoins surpasses the $1.13 trillion threshold again, we may witness one of the largest altcoin seasons in cryptocurrency history.
Several key factors drive Davis's optimism about the upcoming altcoin surge:
Bitcoin's performance: currently at an all-time high, the strength of Bitcoin's price often sparks interest in altcoins.
Political Transition: Donald Trump will be inaugurated in 34 days, which may shift market sentiment towards cryptocurrencies.
Global Rate Cuts: Central banks worldwide are lowering interest rates, which typically increases market liquidity.
Increased Capital Investment: A large influx of cheap capital is entering the cryptocurrency space, laying the groundwork for potential growth.
Risk Environment: The current market conditions are among the strongest for risk assets, creating an ideal backdrop for altcoin investments.
With Bitcoin's dominance rising, a rebound is expected.
Cryptocurrency analyst Miles Deutscher shares Davis's views, emphasizing that the real altcoin season has yet to begin. He notes that there is compelling historical evidence suggesting that altcoin seasons are not coincidental but are unique seasonal phenomena supported by statistical patterns.
Historically, Ethereum (ETH) has impressive returns from January to May, during which its performance typically exceeds that of Bitcoin. In these months, Ethereum's average monthly return is around 28%, while the returns at other times of the year only average 3%.
Moreover, the analyst claims that the current environment is particularly favorable for this rotation, as historically, during altcoin seasons, Ethereum's performance has outpaced Bitcoin by about 20% per month.
As Bitcoin's performance strengthens, the likelihood of capital flowing into Ethereum and other altcoins is also increasing. This rotation has become evident in the recent surge of Bitcoin's dominance, mirroring the patterns seen around altcoin seasons in 2017 and 2021.
At the time of writing, the largest altcoin in the market
ETH's
Trading at $3,686, down 4.4% in 24 hours and nearly 6% over the week.