The alt season often begins at the high point of Bitcoin. The first time was when BTC hit $69,000 but failed to break through effectively; the second time was when BTC hit $100,000.
The next altcoin cycle is likely to begin after BTC stabilizes above $100,000. I can’t predict the future, and while I hope this will happen in the first quarter of 2025, based on facts, we may also see a repeat of the 2024 Q2 and Q3 volatility in the coming months - we must be prepared for this.
Cottage Season Condition 1: Evaluation of Capital Overflow Condition
In Figure 1, the green indicates whether the total scale of stablecoins flowing into exchanges over 30 days is greater than the dollar value of BTC being withdrawn from exchanges. If so, it means that besides buying BTC, these funds also have the potential to spill over into altcoins. The higher the green signal column, the greater the theoretical spillover value, which indicates more preconditions for the start of the altcoin season.
From the data, during the periods of 2023.10-2024.3 and 2024.11-2024.12, the theoretical spillover value is the highest, meaning the possibility of generating 'altcoin season' is greater during these two periods. There is also a small period between August and September, but neither in terms of scale nor duration does it compare to the above two periods, making it relatively weaker in influence.
Altcoin season condition 2: Capital inflow into mainstream assets.
Historically, BTC often leads the overall sentiment in the crypto market first, then market confidence flows into other large-cap mainstream coins, and finally tilts further towards ALT. A tool to visualize this capital rotation is to use the 30-day changes in the realized market cap of BTC and ETH along with the total supply of stablecoins (as shown in Figure 2). When these three major assets all show net capital inflow, it is considered that market sentiment is starting to become euphoric, and overall risk appetite is rising, which is also one of the macro prerequisites for the beginning of altcoin season.
From the data, during the periods of 2023.10-2024.8 and 2024.10-2024.12, all three major mainstream assets show net capital inflow, peaking in March and December 2024. This is also the most FOMO point of market sentiment so far in this cycle.
Altcoin season condition 3: Positive momentum in the dispersion of altcoin market capitalization.
The data basis for judging the start of altcoin season also requires a third condition, which is to isolate positive momentum within the dispersion of total market capitalization of altcoins. We need to look for periods when the 7D SMA total valuation within the altcoin range is greater than its 30D SMA total valuation. This can represent that the valuation of altcoins is magnifying in the short term, and the liquidity flowing into altcoins is rapidly increasing.
In Figure 3, the red line represents the 7D average, while the blue line represents the 30D average; from the data, during the periods of 2023.10-2024.4 and 2024.11-2024.12, the red line crosses above the blue line, indicating that liquidity in the crypto market is starting to tilt towards altcoins, and the market capitalization of altcoins is entering a phase of positive momentum growth.
The above three conditions are considered from different perspectives: condition 1 represents the possibility of capital spillover; condition 2 represents overall sentiment and risk appetite; condition 3 represents liquidity inclination. When all are met simultaneously, it is highly likely that the altcoin season is coming.
Current condition 2 is satisfied, but 1 and 3 are not; therefore, we can consider that the foundation for starting the altcoin season is present, but liquidity is still concentrated in mainstream assets (especially BTC), and there is not much spillover into altcoins.
However, we can also see that the 'negative spillover' in condition 1 is slowly shrinking, which is a positive signal. Although the altcoin season that everyone is looking forward to may require a bit more patience, what is meant to come will come.
I do not believe that altcoins will peak here because I do not think Bitcoin will continue to rise while altcoins are dying, nor do I think Bitcoin will reach a cyclical peak at this position.
So my conclusion is: BTC will continue to rise, and the increase will exceed that of 2024; the theme of altcoins remains offensive.
Build positions in batches, operate patiently.
Do not chase the price up; build your position during corrections.
Gradually build your position. If the price drops by 5% and you invest all your funds in altcoins at once, you may panic and sell if the market undergoes a larger adjustment (such as a drop of 10%, 20%, or even 30%).
The correct strategy is: invest 10% of your funds when the price drops by 5%. This way, when a larger correction occurs later (such as 10%, 20%, or 30%), you can continue to gradually increase your position instead of being shaken out by market fluctuations.
What if the correction does not deepen further? That's okay. Don't invest all your funds at once out of fear of missing out; this may force you to exit during a deeper correction.
There will be more corrections and opportunities to build positions in the future.
In a highly volatile market, you cannot perfectly grasp every fluctuation. You do not need to buy at the lowest point or sell at the highest point; just focus on long-term gains.
