The causes of the alt season (i.e., the surge of small cryptocurrencies in a specific period of time) are usually closely related to the overall liquidity and market sentiment of the market, rather than being directly determined by a single factor of interest rate cuts or hikes.
First, the alt season in 2021 was not directly triggered by interest rate cuts. In fact, interest rate cuts usually occur during economic downturns as a means of stimulating the economy. However, if the interest rate cuts are accompanied by "post-disaster reconstruction" policies or similar large-scale liquidity releases, they may drive the overall market up, including the cryptocurrency market. The large-scale water release policies in 2020, especially after the election, laid the foundation for the bull market in 2021.
Similarly, the alt season in 2017 was not directly caused by interest rate hikes. Interest rate hikes usually mean economic prosperity and inflationary pressures, but this does not directly equate to a market decline. In fact, the rise and fall of the market during the interest rate hike cycle depends on a variety of factors, such as market sentiment, capital flow, etc. In 2017, despite the background of interest rate hikes, the market seemed to remain optimistic about the prospects of cryptocurrencies, so the alt season occurred.
In short, the emergence of the alt season has more to do with market liquidity, market sentiment, and investor expectations. When liquidity increases, funds are more likely to flow into the market, driving up prices, especially for altcoins with smaller market capitalization and greater volatility. Therefore, when market liquidity is abundant and market sentiment is optimistic, altcoin seasons are often more likely to occur. However, it should be noted that such increases are often short-term and high-risk, and investors should be cautious.
If you feel helpless and confused in trading at the moment, and want to learn more about the relevant knowledge of the currency circle and first-hand cutting-edge information, click on the avatar introduction to find me. Welcome to like, collect, forward, comment, and leave a message
