Recently, BTC has risen while other altcoins have not, mainly due to the following reasons:
Market capital flow
- Demand for hedging and value storage: In times of market uncertainty or volatility, investors tend to shift funds to relatively more stable and recognized mainstream cryptocurrencies like Bitcoin, using them as a hedging asset or a means of value storage, leading to an increase in Bitcoin's price while altcoin inflows are relatively low.
- Institutional capital preferences: Institutional investors generally pay more attention to the safety and liquidity of assets. As the leading cryptocurrency in the market, Bitcoin has a large market capitalization and high liquidity, making it more favored by institutional investors. A substantial influx of institutional funds into the Bitcoin market pushes its price up, while allocations to altcoins are relatively small.
Market confidence and perception
- Brand recognition differences: As the first decentralized cryptocurrency, Bitcoin has a high level of recognition and brand awareness, widely regarded as the representative of cryptocurrencies, making it easier to gain investor trust and recognition. In contrast, there are numerous altcoins with varying project quality, and investors have relatively low understanding and trust in them, resulting in insufficient market confidence, which limits price increases.
- Market cycle impact: The cryptocurrency market is cyclical. In the early stages of market recovery, funds usually first flow into mainstream currencies like Bitcoin. Once market sentiment heats up further and investor risk appetite increases, it gradually spreads to the altcoin market.
Technical and fundamental factors
- Technical development bottlenecks: Some altcoin projects encounter bottlenecks in technological innovation and development, such as issues with scalability, security, and transaction speed, which cannot meet market demands, affecting their market competitiveness and investor interest, leading to a lack of price increases.
- Project fundamental differences: Bitcoin has a relatively stable technical architecture and development roadmap, with clear fundamentals. In contrast, altcoin projects have significant fundamental differences; some lack real application scenarios, technical strength, or team support, making it difficult to sustain price increases.
Regarding when the altcoin season will arrive, there are currently some signs suggesting it may be around 2025.
- Metric analysis: According to Blockchain Center data, Bitcoin's dominance has fallen from 60% to 51% since November 2024, and the total market capitalization of altcoins has surpassed the peak set in November 2021. The Blockchain Center's Altcoin Season Index broke the 75% threshold on December 2 and maintained it for a week.
- Market trends: With the overall recovery of the cryptocurrency market, funds are starting to spill over from Bitcoin and Ethereum, increasing the likelihood of flowing into altcoins. Additionally, it has been reported that some cryptocurrency investment firms are aggressively submitting applications for altcoin spot ETFs, which, if approved, will bring more funds to the altcoin market.
- Regulatory environment: The chairman of the U.S. Securities and Exchange Commission is expected to resign in January 2025, and the market anticipates a more relaxed regulatory environment in the future, which may inject confidence into altcoin development.