The founder and CEO of CryptoQuant, Ki Young Ju, recently argued that the "altcoin season" – the phase where altcoins experience strong price increases typically following a Bitcoin bull market – will require new capital inflows from retail traders to begin.
This quantitative analyst believes that capital flows from institutional investors are currently locked in ETFs, and institutional investors who own cryptocurrencies indirectly through investment vehicles are unlikely to transfer profits from large assets like BTC or Ether to altcoins. Mr. Ju wrote:
"For altcoins to reach a new all-time high market capitalization, they need significant capital from new users on exchanges. The fact that the market capitalization of altcoins is below previous peaks indicates that liquidity from new users has diminished."
"Altcoins should focus on developing independent strategies to attract new capital, rather than relying on Bitcoin's momentum," Mr. Ju concluded, while emphasizing that he remains optimistic about altcoins.
Bitcoin market capitalization compared to altcoin market capitalization | Source: Ki Young Ju
Fostering FOMO among retail investors
The CEO of CryptoQuant emphasized that fostering FOMO (fear of missing out) among retail investors is a key factor in attracting new capital inflows, thereby driving up altcoin prices – especially for smaller-cap altcoins.
In October 2024, renowned analyst Willy Woo remarked that altcoin seasons will gradually weaken with each market cycle. On social media, he shared with his followers:
"There will be short price surges of mid-cap and small-cap altcoins after BTC rises, as investors chase higher returns on the risk curve. This is a normal part of the market, and we also see this in the stock market – it's just that altcoin seasons will be weaker with each cycle since the altcoin bubble in 2017."
Some indicators suggest that retail investors may have started experiencing FOMO (fear of missing out). Open interest in Ether futures reached a new high on November 27 – indicating significant market interest and the potential for a new price surge for this smart contract asset to spill over into other cryptocurrencies.
Additionally, retail investors have purchased about $100 million in MicroStrategy shares over the past seven days. This stock has become a favorite choice among traders – especially among retail investors who view MicroStrategy as an indirect investment in Bitcoin.