Written on the eve of the altcoin explosion:
1. Not surpassed the price peak of March.
2. Not surpassed the historical high of 2021.
3. Will altcoin opportunities explode across the board?
4. The process goes from fund inflow to fund outflow.
Funds flowing out of BTC ➩ BTC's dominance declines ➩ Altcoins accumulate ➩ Surge
This chart is based on statistical analysis of the performance of the top 100 tokens by market capitalization, dividing them into 'those that have surpassed the 2021 price peak' and 'those that have not surpassed the 2021 price peak'. The data comes from the relevant information displayed in the chart. If you want to pursue a 10x trading opportunity, selecting tokens this way has a relatively high chance.
1/ From the price perspective, altcoin prices are still hovering at bear market levels.
Only 11 have successfully surpassed the historical high of 21 points. After the 2021 bull market, 42 new tokens entered the top 100 market cap ranking, with MEME taking a significant portion.
2/ From the market cap share replication, during the altcoin season in 2021, Bitcoin's market dominance fell from 61.9% to 40%. Currently, Bitcoin's share remains relatively high at 58.5%.
3// From the emotional perspective, it is still a bear market sentiment.
Currently, every group is silent. The only wish of the group members is to break even. The wealth effect has not yet begun. Those who are truly at the end of the bull market have long lost their rationality.
They not only put all their savings into the market but even borrowed money from friends and family, took out loans to go all-in, rushing in recklessly. Those buying Bitcoin will envy those buying altcoins; in that frenzied atmosphere, as soon as they sell their tokens, they will find themselves unable to buy back at the selling price. The market makers will use various news and manipulation tactics to create this atmosphere. Clearly, we are currently not in the state of a bull market's end.
4/ This may be an opportunity; how to select targets?
- As long as the project is still operating, the code repository and social media updates are ongoing, and there are administrators on TG and Discord, there is a high probability that institutions have already intervened and gained control.
- For those with suitable risk-reward, when the timing is right, it can yield three to five times in just seven days or even a day, and in less than a month, it can erupt with the force of three to four years of consolidation. The altcoin season can complete a two-year bull market process for Bitcoin in just seven days.
5/ Will altcoin opportunities explode across the board?
It is highly unlikely that we will see a broad surge like in 2021.
There are mainly three reasons:
The wave of unlocking continues: tokens of low circulation and high FDV projects are continuously being unlocked, bringing heavy selling pressure.
Supply side oversupply: industry infrastructure is further improved, the threshold for entrepreneurship is further lowered, and new projects are issued in excess.
Insufficient growth on the demand side: a lack of attractive new business models, making it difficult for most sectors to achieve product-market fit, which fails to stimulate demand for altcoins.
Take ARB as an example. From the price performance, ARB seems to have little increase, and its price trend even resembles that of a stablecoin. However, from the perspective of market capitalization, ARB's market cap has grown by over a billion dollars in the past year. This is because its token circulation has risen from an initial 12.75% to the current 26.5%. For tokens with high fully diluted valuation (FDV), even if their prices do not show significant increases, maintaining their market cap still requires a lot of investors (capital) to support it.
Currently, there are many popular projects with high FDV in the market. If you still expect these high FDV new projects to increase tenfold or even a hundredfold, one cannot help but ask, where will such massive funds come from?
So this round of the bull market won't surge across the board like it did in 2021. The altcoin season belongs only to some tokens, and finding suitable targets also requires a bit of luck.
5/ How to judge the altcoin season; 4 indicators you must know.
1️⃣ Altcoin index tracks market sentiment towards Bitcoin or altcoins. If 75% of the top 50 altcoins have outperformed Bitcoin in the past 90 days, it is an altcoin season; otherwise, it is a Bitcoin season.
2️⃣ BTC dominance (market cap share)
Funds flowing into BTC ➩ BTC's dominance increases ➩ Altcoins are drained ➩ Altcoins drop
Funds flowing out of BTC ➩ BTC's dominance declines ➩ Altcoins accumulate ➩ Surge
3️⃣TOTAL 2 TOTAL2 represents the total market capitalization of the top 125 altcoins excluding BTC, which can reflect the inflow of funds into altcoins.
4️⃣ ETH/BTC exchange rate From the market cycle perspective, the flow of funds generally goes: BTC — ETH — mainstream altcoins — secondary mainstream altcoins — meme coins. Bitcoin is faith, Ethereum is the leader, and Ethereum's strength is a prerequisite for altcoin surges. When the Ethereum exchange rate strengthens, it is advisable to pay attention to altcoins.
The thing that the bull market fears the most is: greed, fear, blindness, herd mentality, following the trend, and chasing highs and cutting losses, because it is a place where only a few people make money.
If you are afraid of missing the altcoin season, the only thing you can do is to find a cost-effective entry point and set a stop-loss. As for whether it can break the historical high again, luck is quite important.
So what trading opportunities do we have left? Follow the blogger to take off!