Copycat season postponed? Reinterpret market dynamics
Recently, CryptoQuant CEO made an interesting point, pointing out that the current nature of capital flowing into Bitcoin has changed compared with the previous market cycle, which may lead to the delay of the Altcoin Season. However, based on historical data and market structure, we can further analyze this phenomenon.
1. The rise of institutional funds: the impact of ETF and spot demand
Compared with the previous bull market, the Bitcoin rally in 2024 is clearly driven by institutional funds. The approval and trading of spot ETFs has caused a large amount of institutional funds to pour into the Bitcoin market, mainly from investors who want to obtain long-term value storage. In contrast, these institutional investors, unlike traditional cryptocurrency exchange users, have no intention of engaging in frequent fund rotations or switching from Bitcoin to altcoins.
In addition, these funds mainly stay outside the exchange (such as within custodial wallets or ETF products), limiting the impact of their liquidity on the overall market. Even though some major altcoins may benefit from asset allocation, the growth of minor altcoins is still highly dependent on exchange users and their infusion of new funds.
2. History mode: comparison of TOTAL1, TOTAL2, and TOTAL3
It is worth noting that historical data shows that the total cryptocurrency market capitalization (TOTAL1) is usually the first to break through new highs, and then the altcoin market capitalization (TOTAL2, TOTAL3) follows suit. For example, in the 2021 bull market, Bitcoin first drove the rise in TOTAL1, while the altcoin explosion occurred at a later point in time. This phenomenon reflects the natural law of market rotation.
Based on historical data, observing the BTC market capitalization ratio (BTC Dominance), the ETH/BTC exchange rate and the price trend of ETH can also help determine the timing of the arrival of the altcoin season. For example, the BTC.D trend on March 22, 2021 and November 18, 2024 shows that when Bitcoin’s market capitalization ratio begins to decline and ETH/BTC gradually strengthens, it usually means that the altcoin season is coming.
3. Analysis of market structure and capital flow
For altcoins to reach new highs in market cap, there must be a massive influx of new money into exchanges. However, the number of new users in 2024 will grow more modestly compared to 2021, which may lead to a slower recovery in altcoin market capitalization.
