On November 13, Bitcoin surged to $92,000, bringing the total market value of cryptocurrencies to $3.2 trillion, both breaking historical highs. This round has only seen a frenzy in Bitcoin and meme coins, with altcoins completely failing to rise.
The reasons for the lackluster performance of altcoins are generally the following two points:
The market does not buy into new projects with low MC and high FDV token economic models, instead opting to invest in meme coins.
This round does not have a killer application.
The chart below shows Bitcoin's market share BTC.D, currently at 61%, a new high in three and a half years. Will BTC.D continue to rise? Can the aforementioned causes of sluggishness be resolved in this cycle? Is there still an altcoin season? Let's take a look with WOO X Research.
Reference: Trading View
The logic of altcoin rise.
Currently, we are at the early stage of a rate cut cycle, which means the U.S. is releasing more liquidity into risk markets. The flow of funds has directionality; starting from the traditional real estate rise, funds will overflow into the stock market. When the stock market reaches a certain market value, excess funds will flow into mainstream crypto assets (BTC/ETH/SOL). Once the mainstream crypto assets have risen and met market value standards, funds will flow into the smaller market of altcoins, thus driving up the prices of altcoin varieties.
You can imagine the above asset classes as a series of basins from large to small. When enough water is poured down, filling the upper basins, the water will naturally overflow into the smaller basins below. This flow path of funds indicates that funds will flow from relatively low-risk, larger assets to higher-risk, smaller assets according to the characteristics of market liquidity.
Therefore, the prerequisite for the rise of altcoins is: Bitcoin must rise first, until it can no longer rise, and funds are willing to move out of Bitcoin to purchase altcoins.
Reference: @MustStopMurad
Current market cycle: the eve of altcoin explosion.
The chart below shows the changes in the total market value of the crypto market excluding Bitcoin and Ethereum since the beginning of this year (Total 3). This chart also represents whether altcoins can explode. It can be seen that from April to September this year, the overall market value of altcoins showed a significant downward trend, dropping from $75 billion to $55 billion. However, starting in September, we can see the market value stop falling and begin to rise in the chart, increasing from $55 billion to the $60-65 billion range, breaking the downward trend, which also indicates that we have passed the lowest point of altcoins.
As mentioned earlier, BTC.D is now close to 61%, a new high for this cycle and in three and a half years. Based on past experience, the start of altcoin season is often preceded by Bitcoin rising, draining altcoins, leading to a surge in BTC.D. When it rises to a certain level, BTC.D will drop from its peak to the 50%-55% range, allowing altcoins to catch up. We are currently in the cycle of BTC.D surging to its peak.
The current total market value of cryptocurrencies is approximately $3.2 trillion. If the total market value remains unchanged and BTC.D drops from 61% to 50%, it is expected that $320 billion of liquidity will be injected into the altcoin market, which also represents that Total 2 (excluding Bitcoin market value) will grow by 28%!
* Calculation formula: [3.2T*(61-50%)] / [3.2T*(1-61%)] = 28%
From a financing perspective, future outlook: focus on DeFi and applications.
We have just assessed the current market level from various market value data, and the future outlook needs to consider the current financing situation. Financing represents confidence in the crypto market for the next 6-12 months and is a leading indicator of the development of altcoins in this cycle.
In the past three months, the financing amount has revolved around infrastructure, completing a total of $870 million in financing. Infrastructure is a key track in the financing landscape of the crypto market. As blockchain is still in its early development stage, investors are quite interested in positioning themselves early in building infrastructure. We can focus on the second and third tracks, which are DeFi and others (usually referring to DApps). The former has a total financing amount of $430 million, while the latter has $310 million, leaving other tracks far behind.
The essence of financing is to invest in early potential projects. While everyone criticizes the poor performance of altcoin prices, investment institutions are beginning to lay out early DeFi and application projects, expecting a new round of explosions in 2025.
Reference: Rootdata
