Looking back at the end of 2022, after the FTX collapse, Bitcoin touched the bear market bottom of about $15,000. At that time, we predicted it would reach $100,000, which is now expected to be achieved by December 2024.
However, the performance of altcoins is starting to decouple from Bitcoin. In the future, there may be a wave of increase due to Ethereum's strength, but its cycle is complex and unpredictable, containing both risks and opportunities.
The best strategy is to buy low when the market is cold and sell high when the heat is on. I tend to exchange altcoins for Bitcoin when altcoin prices are high, and then switch back to altcoins when they pull back and outperform Bitcoin, thus profiting from the exchange rate difference. Additionally, one can also take the opportunity to switch to other currencies to optimize returns.
Altcoin Season Condition Analysis 1: Capital Overflow Condition Assessment
The green signal bars in the chart indicate whether the scale of stablecoins inflowing to exchanges within 30 days is greater than the dollar value of BTC outflowing from exchanges. The higher the green bar, theoretically the more funds overflow to altcoins, increasing the likelihood of triggering Altcoin Season.
Key Time Points:
High Overflow Period: October 2023 to March 2024, and November to December 2024. These two periods theoretically have the maximum overflow value, and the probability of Altcoin Season starting is the highest.
Secondary High Overflow Period: Although there are signals from August to September, both the scale and duration are inferior to the above two periods, thus having a weaker influence.
Altcoin Season Condition 2: Capital Inflow of Mainstream Assets
From historical patterns, BTC usually leads market sentiment, followed by capital flowing into other large market cap mainstream coins, and then tends towards altcoins. By observing the changes in realized market cap of BTC and ETH as well as the 30-day increase and decrease of stablecoin supply, one can measure capital inflow (as shown in Figure 2).
Key Indicator: When there is net capital inflow into BTC, ETH, and stablecoin supply, market sentiment is high and risk appetite increases. This is one of the necessary macro conditions for the start of Altcoin Season.
Data Analysis: Peak Periods: October 2023 to August 2024, and October to December 2024, where all three major mainstream assets show net capital inflow, with March and December 2024 reaching the peak of market sentiment, becoming the most FOMO moments in this cycle.
Altcoin Season Condition 3: Positive Momentum in Altcoin Market Capitalization
The third key condition for the start of Altcoin Season is the positive momentum growth of the total market capitalization of altcoins. This is specifically represented by the 7-day moving average (7D SMA) being above the 30-day moving average (30D SMA). This indicates a rapid expansion of altcoin valuations in the short term, with significant increases in funds and liquidity flowing into altcoins.
Data Analysis:
Key Periods: October 2023 to April 2024, and November to December 2024, where the 7D SMA red line repeatedly crosses above the 30D SMA blue line, indicating that liquidity is gradually shifting towards altcoins, entering a positive momentum growth phase.
Summary
The above three conditions assess the likelihood of Altcoin Season from the perspectives of capital overflow, market sentiment, and liquidity inclination:
Condition 1: Capital Overflow Potential
Condition 2: Overall Sentiment and Risk Appetite
Condition 3: Altcoin Liquidity Incline
When all three are met simultaneously, Altcoin Season is highly likely to arrive.
Current Situation:
Condition 2 has been met, with high market sentiment and risk appetite.
Conditions 1 and 3 have not yet been met, with capital still concentrated on mainstream assets (especially BTC) and insufficient liquidity in altcoins.
However, the negative overflow condition 1 is narrowing, which is a positive signal. Although Altcoin Season still requires patience, the trend is gradually improving.
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