The expectation for altseason (a period in which altcoins appreciate more than Bitcoin) is common in the cryptocurrency market, but its arrival does not always occur as many expect. This can happen for several reasons:
1. Cryptocurrency Market Cycle
Altseason usually occurs after a period of significant Bitcoin bullishness. This is because investors tend to reinvest their BTC profits into altcoins, seeking higher returns.
However, if Bitcoin is in a dominance cycle (consistently rising in value), it can "suck" liquidity out of the market, making it difficult for altcoins to grow.
2. Bitcoin Dominance
The Bitcoin Dominance Index (BTC.D) measures the percentage of the total cryptocurrency market cap that is held by BTC. When Bitcoin dominance is high, altcoins generally have less room to grow.
Altseason only occurs when this dominance drops significantly, allowing capital to flow into altcoins.
3. Macroeconomics and uncertainty
External factors such as rising interest rates, government regulations, and economic crises can reduce the appetite for risky assets like cryptocurrencies. In this scenario, investors prefer safer assets like Bitcoin over altcoins.
4. Excessive expectations
Many traders and influencers create expectations about altseason based on historical patterns, but the market is dynamic and does not always follow the same cycles.
Furthermore, the increase in the number of altcoins on the market dilutes the available capital, making widespread rallies difficult.
5. Lack of confidence in projects
Not all altcoins have solid fundamentals. In previous cycles, many projects with no real utility rose solely on speculation. Today, investors are more cautious, prioritizing projects with clear value.
How to identify signs of a possible altseason?
Bitcoin Dominance Drop: If BTC stabilizes or starts losing dominance, altcoins could gain traction.
Increased altcoin trading volume: An increased flow of capital into altcoins could indicate the beginning of an altseason.
Specific narratives: Altseasons can be driven by specific trends, such as DeFi, NFTs, or artificial intelligence.