The cryptocurrency market typically goes through cycles of capital rotation between different asset classes. Based on past observations, we can visualize the process of a cycle as follows:
Phase 1: Bitcoin Leads
Money flows into Bitcoin, driving its price up sharply.
Ethereum also rises, but usually at a slower pace than Bitcoin.
Over time, Ethereum begins to accelerate and outperform Bitcoin.
Phase 2: Ethereum Breaks Out
Ethereum continues its strong growth, surpassing Bitcoin, even sparking discussions of a "flippening" (Ethereum surpassing Bitcoin in market capitalization).
Money starts flowing into other large-cap coins, creating large buy-ups.
Phase 3: Large-Cap Coins Take Center Stage
Ethereum continues to outperform Bitcoin.
Large-cap coins rise sharply, forming parabolas on the charts.
Some altcoins with strong fundamentals, regardless of market cap, also begin to rise in price.
Phase 4: Altseason Explodes
Large-cap coins peak and may exhibit "blow-off top" patterns.
Mid-cap, small-cap, and micro-cap coins all rise in price simultaneously.
Large-cap coins continue to outperform Bitcoin and Ethereum.
Almost every coin rises sharply, regardless of fundamentals.
Meme coins are everywhere, and market sentiment is euphoric.
Capital Flow Pattern: Bitcoin -> Ethereum -> Large-cap coins -> Small-cap coins
However, the current cycle is showing some different signs:
Ethereum's Strong Price Action: Over the past two weeks, Ethereum has shown significant strength, which is an indicator that large-cap altcoins have entered a period of growth.
Older Large-Cap Coins Rising: Some older large-cap coins, often considered "garbage coins," have also unexpectedly risen sharply in recent days.
These signs suggest that we are very likely in the early stages of an altseason (a period of strong altcoin price increases).
Explanation:
Ethereum's strength may be due to the development of DeFi (decentralized finance) and NFTs (non-fungible tokens) on its platform, attracting investor interest.
The rise of older large-cap coins may be due to speculative capital seeking assets with low value and high growth potential.
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