Source: (Forbes)
Compiled and organized by: BitpushNews
Block reward halving, Bitcoin hitting new highs, and altcoin season is upon us—is this a classic bull market recipe? Or not?
First, the BTC halving reduces its issuance rate, thereby triggering a supply shortage. After that, BTC will climb all the way to a record high, followed by the speculation of altcoins. Investors are more inclined to pursue higher returns, and the peak season of altcoins will explode in full force. Shortly after its latest halving, Bitcoin passed the $100,000 mark — a historic milestone. However, the altcoin market is currently not seeing a surge.
Where is the usual rebound? Has the classic plot been ruined? The surge in institutional capital and the liquidity crunch brought about by high interest rates, coupled with Trump’s aggressive and bold views on cryptocurrencies, have made one thing certain: this cycle will be unlike any we have seen before.
How is this cycle different?
Each cycle has four phases: accumulation, rise, distribution, and fall. Although the mechanics behind these stages are well known, timing the market is one of the most recognized skills. You are trying to predict when we will enter a certain phase in order to develop a trading strategy. However, while cycles follow predictable patterns, we must not forget the broader market context – cryptocurrencies have experienced many changes over the past year.
institutional capital
The increasing presence of institutional investors in the Bitcoin market has reshaped the dynamics of the Bitcoin market. Supported by the emergence and growth of cryptocurrency ETFs, Bitcoin has become the seventh largest asset in the world and has become a new choice for institutional investors. Increased participation from institutional investors generally leads to greater price stability. However, this may not be good news for altcoins. After all, volatility and large corrections can redirect capital flows toward altcoins. Lower volatility means lower returns that may flow back into the altcoin market.
This year is a special year. The launch of the Bitcoin spot ETF has brought significant inflows of traditional financial capital into the cryptocurrency market. Institutional flows into these ETFs triggered a Bitcoin supply shock, reinforcing its dominance. The demand for Bitcoin triggered by the ETF has directly impacted Bitcoin dominance, which currently stands at around 56%, an important metric often overlooked by novice traders.
It measures BTC’s market share relative to altcoins, providing insight into whether we are in peak Bitcoin season (where BTC outperforms) or altcoin season (where altcoins outperform). What does strong BTC dominance coupled with stable Bitcoin prices mean? Altcoin selloff. And in this cycle, Bitcoin spot ETFs have extended Bitcoin’s dominance. This new variable was not present in previous bull markets and will make the 2025 altcoin season undoubtedly unique.
Macro: Liquidity and Regulation
If you ask any financial executive what the most important financial metric is, they will tell you liquidity.
In 2023 and 2024, U.S. interest rates rise to one of their highest levels in a long time. Although it has fallen from 5.25% a year ago to 4.19% now, it is still a relatively attractive yield for a risk-free asset. On the other hand, rate cuts tend to fuel cryptocurrency bull markets for one simple reason – they create a favorable environment for riskier assets to flourish. After all, risk-free government bonds yielding 0.11%, as they do in 2021, are just as attractive as losing capital to inflation. Low interest rates equal cheaper borrowing and higher liquidity, which in turn motivates investors to earn higher returns wherever they park their money. Where? Yes, you guessed it. Cryptocurrency.
Trump’s victory undoubtedly shook up the cryptocurrency world. (Bitcoin Bill) has triggered heated debate inside and outside the currency circle. If passed, the Senate legislation would require the Treasury Department and the Federal Reserve to purchase 200,000 Bitcoins per year over five years to accumulate 1 million Bitcoins. In other words, about 5% of global supply. There is no doubt that pro-crypto regulations are a very meaningful step for the widespread adoption of crypto assets, and Trump’s stance has proven to inspire positive sentiment, with BTC hitting a record not long after the future president confirmed plans to create a BTC Federal Reserve. All time high.
With BTC maintaining dominance, high interest rates, and pro-crypto regulations in the U.S., should we expect a full-blown altcoin supercycle in 2025? This is the billion-dollar question.
When will the “altcoin peak season” come?
If history has taught us anything, it’s that altcoin surges typically follow major Bitcoin moves. However, estimating how big these price swings will be — or how soon after Bitcoin hits all-time highs before altcoins explode — is impossible.
David Siemer, CEO of Wave Digital Assets, said: “I don’t think we will see a dramatic altcoin season in the near future like 2021, which means BTC dominance will fall below 40%. But as BTC continues to rise , we will see a significant increase in altcoin values.
Siemer later added: “For altcoins to break through relative to BTC like they did in 2021, altcoin usage (adoption) and value (revenue capture) will need to increase by several orders of magnitude,” emphasizing that this will likely take at least 3 years . But once it begins, altcoin season itself is easy to spot, as there are some pretty bullish signals:
Altcoin prices have grown rapidly and outperformed Bitcoin, especially large-cap altcoins. This means that not only are altcoins overall rising, but they are rising more than Bitcoin.
Altcoin dominance surges, just like the altcoin season in May 2021. These coins dominate the market, with the combined market capitalization of the top 100 altcoins reaching 1.3 times that of Bitcoin.
FOMO-driven sentiment, high trading volumes and risky investors are adding to buying pressure and price momentum.
altseason is not merely a random period during which altcoins outperform Bitcoin; it is a distinct seasonal phenomenon from January to May.
further reading: https://t.co/5gBhf0SLZP pic.twitter.com/9ypjf4HmfW
— Aporia (@0xaporia) December 16, 2024
Cane Island Digital Research shared its findings on the seasonality of altcoin rallies in its “Altcoin Peak Season Proof,” indicating that ETH is representative of altcoins experiencing a bull market. Additionally, it mentioned a repeating pattern during the altcoin peak season from January to May.
narrative dominance
While the upcoming altcoin season may look a lot different than what we’re used to, certain niches are already taking hold in the cryptocurrency space. After the VIRTUAL token experienced a 24908.4% surge (or 249x), it’s safe to say that we have entered a new level of narrative dominance.
While memecoins may overtake areas like real-world assets or AI, AI agents are in a league of their own and are often seen as a driver of the next supercycle. Artificial intelligence is still at its peak, and with the advancement of AI agents, the on-chain AI economy has captured a large share of the market, which will peak at 50% in 2024, according to Kaito AI. This trend is likely to continue in 2025, driven by unprecedented demand for AI services.
AI mindshare dropping since hitting the 50% peak.
DeFi also remaining above memes. pic.twitter.com/HzTqaV4Key
— Kaito AI (@_kaitoai) December 20, 2024
Institutional adoption, sparked by major companies like BlackRock, has also impacted areas such as real-world assets, legitimizing tokenization as a fundamental part of the crypto world. While much of the attention has been focused on AI and AI agents, traditional finance is exploring tokenization as a viable business option, with large banks like JPMorgan Chase and Goldman Sachs looking to disrupt financial markets.
How to prepare for “altcoin season”?
As we head into 2025, here are a few things to keep in mind before altcoin season begins.
Bitcoin dominance is a classic reference indicator, please use it to master your trading opportunities. Sites like BlockchainCenter.net can help assess whether the market is currently in altcoin or Bitcoin season. Things to note are:
Cryptocurrency markets are largely driven by emotion, so pay attention to regulatory moves, general economic trends, or crypto-native narratives (DeFi, AI agents, meme coins).
Not all altcoins will follow the dynamics of Bitcoin’s price. Historically, projects with strong fundamentals or that align with an emerging narrative (such as AI projects) have performed better. However, prioritize quality over quantity, and focus on projects with strong fundamentals, active teams, and ideally product-market fit that inspires a large community.
Pullbacks are a healthy phenomenon. They indicate that the market is consolidating and allow investors to enter positions before the next move higher. Altcoin peak season usually occurs during the later stages of a bull market. Please be patient.
Conclusion
The cryptocurrency market is maturing. Each cycle is a stepping stone and should be viewed as a learning lesson. While meme coins are still reaping the rewards, new narratives are becoming increasingly influential.
But here’s the most interesting thing—currently popular narratives, like AI agents, are more than just passing fads. The bottom line is that we will now face greater influence from macro factors and institutional adoption than in any previous bull market. Does this mean we should expect different altcoin dynamics this time? To some extent yes. Nor should we blindly follow the patterns of past years. The question is not if altcoin season will happen, but when it will happen, and how it will differ from past years.
Get ready for the challenge!
(The above content is excerpted and reprinted with the authorization of our partner PANews, original text link | Source: BitPushNews)
Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.
"(Forbis): Gold Rush Guide for the 2025 "Altcoin Peak Season"" was first published on (Block Guest).
