The founder and CEO of CryptoQuant, Mr. Ki Young Ju, recently argued that "altcoin season" – the period when altcoins experience significant price increases usually following a bullish market for Bitcoin – will require new capital injections from retail traders to begin.
This quantitative analyst believes that capital from institutional investors is currently locked in ETF funds, and institutional investors, who hold cryptocurrencies indirectly through investment instruments, are unlikely to transfer profits from large assets such as BTC or Ether to altcoins. Mr. Ju wrote:
"For altcoins to reach a new all-time high market cap, they need a significant amount of capital from new users on exchanges. The fact that the market cap of altcoins is lower than 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.
Driving FOMO sentiment from retail investors
The CEO of CryptoQuant emphasizes that driving FOMO (fear of missing out) sentiment from retail investors is a key factor in attracting new capital, thereby boosting the price of altcoins – especially those with small market caps.
In October 2024, renowned analyst Willy Woo commented that altcoin seasons would 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 along 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 to experience FOMO sentiment. 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 spread to other cryptocurrencies.
Additionally, retail investors have purchased approximately $100 million in MicroStrategy shares over the past seven days. This stock has become a favorite among traders – especially those retail investors who view MicroStrategy as an indirect investment in Bitcoin.
Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making decisions.
