According to relevant data, as many as 95% of the tokens that were popular in 2017 have gradually withdrawn from the market, such as Litecoin (LTC), Monero (XMR) and Ethereum Classic (ETC). In the current market cycle, many venture capital-backed cryptocurrencies (VC coins) did not usher in the expected sharp rise after listing, but directly entered a bottomless downward channel.
Faced with such market trends, investors can't help but ask:
Is it possible that their long-awaited altcoin season will still come?
The answer to this question not only affects the wealth of investors, but also affects the future development of the entire cryptocurrency market.
Amid the current uncertainty, investors need to remain vigilant while also keeping a close eye on market dynamics so that they can seize opportunities when the altcoin season arrives.
Source 1
01
Bitcoin season, altcoin winter
Dasuantuo·Altcoin
According to TradingView statistics on November 3, Bitcoin's market share (BTC.D) climbed to 60.52%, setting a new high in this bull market since September 2022.
At the same time, excluding the top ten cryptocurrencies by market capitalization, the ratio of the total market capitalization of other altcoins to Bitcoin's market capitalization (OTHERS/BTC) dropped to 0.16, accounting for only 16% of Bitcoin's market capitalization, the lowest ratio since January 2021.
Looking further at Coinmarketcap data, the Altcoin Seasonality Index reflects that only 25% or less of the top 100 cryptocurrencies have outperformed Bitcoin over the past 90 days, indicating that it is currently a Bitcoin season.
Market research firm Matrixport also pointed out that although there are more than 20,000 cryptocurrencies on the market, the market's focus is still highly concentrated on Bitcoin, and the craze for altcoins has not yet arrived.
Regarding this extreme market differentiation phenomenon, some analysts believe that the cryptocurrency market has lacked a clear direction since April, and the uncertainty of the US election has led to increased market volatility, which has magnified the vulnerability of altcoins.
The decline in altcoins since the beginning of the year can also be attributed to the following key factors:
01
Insufficient liquidity
The founder of CryptoQuant pointed out that the crypto industry is facing a crisis, and altcoins have lacked capital inflows and performed poorly this year.
He likened the crypto industry to a game where players get pleasure from it, but the lack of explorers of new technologies has made crypto projects unattractive. He also mentioned that although the continued growth in the supply of stablecoins is a positive sign, the new trading volume is not enough to create sufficient buy-side liquidity.
The total market value of stablecoins is currently approximately US$166 billion, but only 21% of stablecoins are used for transactions, far lower than 50% in 2021.
02
Market Cycles
Crypto analyst Willy Woo believes that the current altcoin cycle is significantly different from the past. This is the third large-scale loss of retail investors since 2017, and the influence of the altcoin cycle is weakening.
The DeFi and NFT crazes in 2020-21 and the current Meme coin craze have all led to continued losses for retail investors. Although altcoins may rebound after Bitcoin's rise, the overall trend shows that the intensity of the altcoin cycle is gradually weakening.
Well-known trader Eugene also pointed out that the valuations of altcoins that have fallen 80-90% since their launch are approaching reasonable levels. Every unlock is a bullish opportunity, allowing long-term holders to accumulate more tokens.
03
Lack of value accumulation
Zhu Su said that VC coins lack value accumulation and are actually Memecoins.
He predicts that the cryptocurrency market will see a large number of assets with market capitalizations between $50,000 and $500 million, and relatively few assets with market capitalizations between $500 million and $50 billion.
Well-known investor Nawal also expressed a similar view. He believes that most crypto projects fail because the founding team achieves financial freedom too early and has no motivation to recruit new team members.
04
Regulatory pressure
On November 2, the Blockchain Association disclosed data showing that since Gary Gensler became the chairman of the U.S. Securities and Exchange Commission (SEC), the U.S. crypto industry has spent more than $400 million to respond to the SEC's enforcement actions. During this period, the SEC filed lawsuits against some large crypto companies, including Coinbase, Kraken, etc.
02
Can altcoins still have a spring?
Dasuantuo·Altcoin
Throughout the history of cryptocurrency, altcoins have experienced several glorious moments of explosion, but the recent bull market seems to focus more on Bitcoin and emerging Meme coins, triggering widespread discussion in the market about the future potential of altcoins.
As to whether altcoins can create another wave of popularity, various parties in the industry have expressed their views, forming a clear confrontation between bulls and bears.
01
Bullish camp
Bitwise’s chief investment strategist stressed that clarity on the regulatory environment after the U.S. election is crucial to the future development of altcoins.
Regardless of the election results, the regulatory framework for Bitcoin is moving in a clearer direction, which is undoubtedly a good thing for the entire cryptocurrency ecosystem, especially altcoins.
In the short term, the market tends to believe that Trump's victory will bring more direct positive effects, but in the long run, with the influx of institutional investors, the continued injection of ETF funds, and the steady increase in adoption rates, altcoins are expected to show growth that is no less than that of Bitcoin in this wave.
The research director of Galaxy Digital is also optimistic, believing that Trump’s victory will provide a more relaxed regulatory environment for altcoins. Compared with Bitcoin, this positive impact may be more significant.
CryptoQuant’s data analysis reveals the movements of South Korean investors, who are actively deploying high-quality altcoins and predict that these currencies will see a strong rebound in the fourth quarter.
South Korean trading platforms have seen a surge in trading volumes for high-beta altcoins, further confirming the market’s enthusiasm for such assets.
Markus Thielen, founder of 10x Research, pointed out in a recent report that keen traders are accelerating their layout and expect altcoins to see a strong rise in the fourth quarter.
On-chain analyst Ali asserted that the rise of altcoins is only a matter of time and its market value is expected to exceed the trillion-dollar mark.
Bitfinex predicts that if Bitcoin's dominance reaches a temporary peak, altcoins may usher in a glorious period that surpasses Bitcoin, laying a solid foundation for the upward trend in the fourth quarter.
Michael van de Poppe of MN Trading predicts that the next Fed rate cut will be a signal for the start of a bull market in altcoins.
CZ, on the other hand, believes, based on historical rules, that 2024 may become the "year of recovery," heralding a bull market in the following years.
02
Bearish Voice
However, not everyone is optimistic about the future of altcoins.
The COO of MNNC Group pointed out that the strong performance of Bitcoin and Ethereum has eliminated some altcoins to a certain extent, and the trend of industry consolidation is irreversible.
Willy Woo warned that the current market cycle is more like a "Meme bubble casino" and advised investors to adopt a trading rather than holding strategy because the statistics of altcoin market capitalization are biased, reflecting only the sum of successful projects while ignoring the losses of failed projects.
He warned that the altcoin market is more like a game controlled by insiders, and the ultimate winners are often the "dealers" who have information advantages.
As for when altcoins will be able to stabilize and recover, Benjamin Cowen, founder of Into The Cryptoverse, predicts that the liquidation process of altcoins may last until December 2024, or even be delayed until the second week of January 2025. This will be a long and challenging journey.
Source 1
To sum up, the future direction of altcoins is full of uncertainty, with bulls and bears holding different views, and the market trend will depend on the intertwined influence of multiple factors.
For investors, the wisest choice may be to remain cautious and pay close attention to market trends.
Summary | In conclusion
In the turbulent ocean of cryptocurrency, the fate of altcoins always seems to be closely linked to the ups and downs of Bitcoin, but they often show a unique rhythm and pace. Faced with the current market differentiation and challenges, investors need to examine the opportunities and risks of altcoins with a more mature mentality.
Whether it is the optimistic expectations of the bulls or the sober warnings of the bears, they all remind us that the future of altcoins is not a smooth road, but full of unknowns and variables. However, it is this uncertainty that breeds infinite possibilities. In the long history of cryptocurrency, altcoins have repeatedly proved their resilience and potential.
Therefore, for investors, staying alert and patient, paying close attention to market dynamics, and rationally analyzing every market fluctuation may help them capture their own wealth opportunities when the next spring of altcoins comes. After all, in the world of cryptocurrency, only those investors who dare to embrace change and explore the unknown can truly have the last laugh.
