Here’s why a major altcoin season isn’t coming
Prominent financial analyst Murad Mahmudov believes there won’t be a major altcoin season due to a decline in total excess savings among U.S. households.
According to recent data from the Federal Reserve Bank of San Francisco, Americans have now spent all of their savings. The sharp increase in savings between March 2020 and August 2021 was driven by a sharp drop in consumer spending.
Excess savings peaked in August 2021 at more than $2.1 trillion, according to the San Francisco Fed economists.
While those savings are now almost gone, reports suggest that a strong labor market could help sustain spending. However, recent earnings reports from big companies like Amazon show that consumers have become more cautious with their budgets.
Given that Americans are spending more cautiously now than in 2021, Mahmudov believes they are less likely to splurge on risky altcoins.
“The best you can hope for is that hot money in the cryptocurrency market will drive altcoin popularity just in time this month,” he said.
The analyst also pointed to the fact that altcoins are in oversupply. Mahmudov added: “Considering the maximum issuance of each new token, the number of altcoins and the total market capitalization are growing.”
When comparing the current market cycle to 2017, analysts pointed out that the market size was much smaller at that time, which means that less capital was required to achieve significant returns. In addition, it was much more difficult to create new tokens at that time.
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