The decline in on-chain meme coin popularity prompts funds to flow back into altcoins, coupled with the advancement of the SOL spot ETF and regulatory easing, leading to a short-term surge in altcoins.
Written by: How is it, Odaily Planet Daily
Bitcoin does not seem to be the only one shining, as funds begin to flow into mainstream altcoins.
According to Quantify Crypto data, in the past 24 hours, among the top 200 cryptocurrencies by market cap, 185 tokens rose, while only 15 tokens were in a downward state. Among the top 100 tokens by market cap, the increase exceeded 8%, with ETH breaking 3400 USDT, a 24H increase of 9.7%; SOL breaking 260 USDT, reaching a historical high; Ethereum Layer 2 OP and ARB both increased by over 15%. On social media, many investors are exclaiming that the 'altcoin season' has finally arrived.
Has the altcoin season already arrived? Odaily Planet Daily will explain the reasons for the recovery in altcoin prices and analyze whether it can be sustained. (Note: The author separates on-chain memes from the altcoin category, classifying on-chain memes listed on leading exchanges as altcoins.)
Why are altcoins rising?
The trading volume of well-known on-chain memes has decreased, and community discussion has somewhat declined.
Previously, Bitcoin prices kept breaking new highs while altcoins fell instead of rising, leading to a general pessimism about this round of the bull market for altcoins, especially for some VC coins facing large-scale unlocks.
As a result, the market's focus has shifted to launching a fairer meme sector, with most funds going on-chain for PVP. The former mainstream altcoins have high market caps but their liquidity is not even as good as that of a recently exploded meme project. For instance, the daily trading volume of the top 100 tokens by market cap is even less than that of the recently popular CHILL GUY.
However, the high-intensity PVP of memes has also deterred some, making it inevitable for funds to return to altcoins, leading to a rotation of funds between memes and altcoins. One reason for the current rise in altcoins is the decline in on-chain meme activity.
The trading volume of well-known meme coins has started to decline, such as ai16z, RIF, and ELIZA, which were previously popular meme coin representatives. According to GMGN data, the trading volume of most has already halved.
The discussion and sentiment around the meme community have declined. The meme groups I am part of have shifted from discussing which projects to invest in to now discussing how to persistently wait for the next wave of meme trends.
SEC Chairman Gary Gensler is about to resign, and altcoins are ushering in a carnival.
Since the approval of Bitcoin and Ethereum spot ETFs, the cryptocurrency market has begun to rise continuously, and the market is also looking forward to the next cryptocurrency to go mainstream.
Today, Bloomberg senior ETF analyst James Seyffart stated: "Cboe has submitted applications to the SEC for 4 Solana spot ETFs, with issuers being VanEck, 21 Shares, Canary Capital, and Bitwise. If the SEC does not reject the aforementioned document applications, the final deadline is approximately early August next year."
The application for a cryptocurrency spot ETF requires the issuer to prepare two documents, namely S-1 and 19b-4. This time it is the S-1 document, representing the application for the listing of the SOL spot ETF, while the documents facing significant review difficulties are mostly concentrated in 19b-4. Therefore, the SOL spot ETF is just getting started.
However, SEC Chairman Gary announced on platform X that he will officially resign on January 20, and the newly appointed SEC chairman may accelerate the review process for the SOL spot ETF, perhaps not requiring the same prolonged timeline as the previous Bitcoin and Ethereum ETFs.
Moreover, Gary's impending departure also allows heavily regulated altcoin projects to breathe easier. Ripple, which has always had a contentious relationship with the SEC, saw its token XRP rise nearly 30% in a single day.
Under the push of regulatory aspects and the SOL spot ETF, the rise of altcoins is also understandable.
Can altcoins continue to rise?
Whether the rise of altcoins can be sustained still requires more observations and validations from various dimensions.
Additionally, from historical experience, altcoin trends are often accompanied by short-term heat-driven movements, but whether they can really maintain a price increase depends crucially on the long-term development capability of the project and the alignment with the overall market environment. Although there are calls for an 'altcoin season' in the current market, if there is a lack of new technological breakthroughs, application implementations, or ecological development support, this wave of market activity may be more of a game driven by temporary fund rotations rather than a trend-driven rise.
Therefore, whether for institutions or individual investors, caution is needed in the face of this round of altcoin trends. On one hand, attention should be paid to changes in the flow of funds in the market, such as on-chain token transfer data and other key indicators; on the other hand, it is also necessary to guard against the risk of short-term pullbacks after price surges, especially the funding movements of leading projects may become important indicators for subsequent trends.
At present, the 'altcoin season' remains a battleground of opportunities and risks, and investors should remain calm.
