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 involves funds flowing in and out.
Funds flow out of BTC ➩ BTC's dominance decreases ➩ Altcoins accumulate ➩ Surge
This chart is based on statistical analysis of the performance of the previous top 100 tokens, categorizing them into 'those that have surpassed the 2021 price peak' and 'those that have not surpassed the 2021 price peak.' The data is sourced from the related information displayed in the chart. If you want to seek a 10x trading opportunity, selecting tokens in this manner has a relatively higher probability.
1/ From a price perspective, altcoin prices are still hovering at bear market levels.
Only 11 have successfully broken through the historical high of 21. After the bull market of 2021, 42 new tokens entered the top 100 rankings, with MEME occupying a large proportion.
2/ From the perspective of market cap ratio replication, during the altcoin season of 2021, Bitcoin's market dominance dropped from 61.9% to 40%. Currently, Bitcoin's ratio still stands at a relatively high level of 58.5%.
3// From an emotional perspective, the sentiment is still bearish.
Now every group chat is filled with silence. The only wish among group members is to break even. The wealth effect has yet to begin. Those who are truly at the end of the bull market have long lost their reason.
They not only put all their savings into the market, but also borrow money from friends and family, take loans to go all-in, and rush in regardless of the consequences. Those buying Bitcoin envy those buying altcoins; in that frenzied atmosphere, as soon as they sell their coins, they will immediately miss the chance to buy back at the selling price. Market makers will use various news and pump tactics to create this atmosphere, which clearly does not exhibit the state of a bull market's end.
4/ This could be an opportunity; how to choose the target?
- As long as the project is still operational, with updates to the codebase and social media not ceasing, and TG, Discord still have administrators, it’s highly likely that institutions have already intervened to gain control.
- For those with appropriate gains and losses, once the timing is right, you can pull out three to five times in seven days or even in one day, and within a month, you can unleash the accumulation of three to four years of volatility all at once. The altcoin season can complete a two-year Bitcoin bull market process in just seven days.
5/ Will altcoin opportunities explode across the board?
It is highly unlikely that the widespread surge seen in 2021 will occur.
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 excess growth: Industry infrastructure is further improved, the threshold for entrepreneurship is lowered, and new projects are issued excessively.
Insufficient growth in demand: Lack of attractive new business models, most sectors struggle to achieve product-market fit, failing 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 appear to have not significantly increased, maintaining their market cap still requires a large number of investors (funds) 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 can’t help but ask, where will such enormous funds come from?
So this bull market won't see a widespread surge like in 2021; the altcoin season only belongs to a portion of tokens. Finding the right targets also requires a bit of luck.
5/ Four essential indicators to judge the altcoin season.
1️⃣ The altcoin index tracks market sentiment, indicating whether it points towards Bitcoin or altcoins. If 75% of the top 50 altcoins have outperformed Bitcoin in the past 90 days, then it's altcoin season; otherwise, it's Bitcoin season.
2️⃣ BTC dominance (market cap ratio)
Funds flow into BTC ➩ BTC's dominance increases ➩ Altcoins get drained ➩ Altcoins fall
Funds flow out of BTC ➩ BTC's dominance decreases ➩ Altcoins accumulate ➩ Surge
3️⃣TOTAL 2 TOTAL2 indicates the total market capitalization of the top 125 altcoins excluding BTC, reflecting the inflow of funds into altcoins.
4️⃣ ETH/BTC exchange rate From a market cycle perspective, the flow of funds generally goes: BTC—ETH—mainstream altcoins—secondary mainstream altcoins—meme. Bitcoin is faith, Ethereum is the leader; Ethereum strengthening is a prerequisite for altcoins to surge. When the Ethereum exchange rate strengthens, one can appropriately pay attention to altcoins.
The most feared aspect of a bull market is: greed, fear, blind following, conformity, going with the flow, chasing highs and cutting losses, as it is a place where only a few people make money.
If you're afraid of missing the altcoin season, the only thing you can do is to find a high-cost-performance entry point and set a stop-loss. As for whether it can break the historical high again, luck plays a significant role.
So what trading opportunities do we still have? Follow the blogger to take off!