Since the beginning of the year, the cryptocurrency market capitalization has grown by 180%. Experts have explained whether a new “alt season” is likely amid the overall growth of digital asset rates
"RBC-Crypto" does not provide investment advice, the material is published for informational purposes only. Cryptocurrency is a volatile asset that can lead to financial losses.
Since the beginning of the year, the cryptocurrency market capitalization has grown by 180%, from $828 billion to $2.33 trillion. Despite the fact that September is traditionally a weak month for digital assets, the total market value of cryptocurrencies continued to rise in early autumn, having grown by 7% since the beginning of the month.
The flagship of the digital asset market, Bitcoin (BTC), fell over the past 30 days to $53.3 thousand, but recovered the decline and updated the maximum since August at slightly above $64 thousand.
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Analysts believe that BTC needs to consolidate above $65.2 thousand to confirm the change of the downward trend to an upward one. Experts told RBC-Crypto what can be expected from the market of alternative cryptocurrencies to Bitcoin in the near future, and whether a new "alt season" is likely.
Altseason is a slang term used by cryptocurrency traders to describe a period of active, simultaneous growth in alternative cryptocurrencies.
"We have finally passed this milestone"
August and summer in general are not the most active and successful periods for trading, especially cryptocurrencies, since they do not have as much liquidity as global stock markets and have increased volatility, says VG GROUP Managing Partner Vagiz Nurullov.
"We have finally passed this point and are generally entering a more active stage of the market. We can see that the market has begun to see an increase in open interest and, in general, traders are more active in entering into transactions, their risk appetite has increased," the expert says.
Change in open interest in crypto futures since 2020. Source: Coinglass
We can see an increase in open interest - it is not very strong yet, but this is the awakening of the market, Nurullov says. According to him, the market is now at a stage where several positive moments have coincided: the upcoming payments of the collapsed crypto exchange FTX to investors, the reduction of the Fed rate, the US elections and seasonality.
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Global factors
The key event of the current financial year is the first reduction in the Fed rate since 2020, which took place on September 18, recalled Oleg Kalmanovich, an analyst at Neomarkets. This marked the beginning of a cycle of reductions in bank interest rates, which is traditionally a strong trigger for the growth of risky assets, including cryptocurrency. Large capital is beginning to lose interest in dollar deposits at lower rates and is being redirected towards digital assets, the expert explained.
He separately noted that the rate was reduced by 2 steps at once - by 0.50%, and the high rate of reduction in interest rates on Western deposits is causing greater interest among investors in the crypto industry.
There are two important issues that will directly impact financial markets in the next few months, the analyst says: further rate cuts and the US presidential election.
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The first factor will depend on the state of the US labor market, where special attention should be paid to the labor market report - the data is released every first Friday of the month (the next report is October 4), Kalmanovich said.
The US presidential election will take place on November 5. Traditionally, the banking sector tries to provide the economy and markets with maximum liquidity before this event, which affects the depreciation of the dollar and the growth of a wide range of digital assets, the expert says. After the election, the state of the US economy and the actions of the Fed will again come to the fore.
"There is not enough liquidity for everyone"
If we talk about the altcoin season, there will not be a season like we used to see before, says Nurullov. The expert justified this by the fact that in previous "alt seasons" there were not so many projects and systems for unlocking coins.
What is token unlocking?
Each cryptocurrency project has its own economy, which is commonly referred to in the industry as tokenomics. The tokenomics of a project determines the economic model of the token and tries to take into account the interests of all project participants.
When a project enters the market, the circulating (i.e. on the market) supply of its tokens is limited: the team, investors of different levels, employees, etc. do not have tokens in hand, so as not to create additional pressure on the price of the coin. As a rule, the tokens of these participants are blocked for a certain period - from several months to several years.
According to the schedule defined in the project tokenomics, these participants start receiving coins and can sell them on the market. This process is called token unlocking.
According to Nurullov, today the attention of industry players is focused on various point projects and there is not enough liquidity for the entire market. Strong projects will "shoot" pointwise, the first wave of growth is expected by the beginning of November, the second - by March, the expert says. But if Kamala Harris wins and pursues a tough policy regarding cryptocurrencies, this forecast will have to be revised, Nurullov admitted.
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At the same time, it is still unclear how strict the regulation of the crypto market will be in the US after the elections. Republican candidate Donald Trump has long and openly supported digital coins, and Democratic Party representative Harris also promised support for the industry, presenting her program to sponsors on September 22.
When choosing projects for investment, it is necessary to look not only at potential unlocks, which can reach 90% of the total emission, but also at the business model of the startup, Nurullov added. According to him, if the token is not related to the project's cash flow, it is not worth buying.
"There is a chance to make up for lost time"
As for the “second-tier” tokens, attention should be paid to those that are a little “behind the growth schedule,” Kalmanovich believes. These are coins that are not yet significantly overbought, but which are lagging behind the overall “digital asset fleet.”
The analyst classifies cryptocurrencies NEAR (NEAR), XRP (XRP) from Ripple and Polkadot (DOT) as such assets. Their prices have been lagging behind the general schedule since the beginning of the year and can still make up for lost time on the “fuel” of lower Western rates, Kalmanovich believes.
He noted that the NEAR project stands out in particular against this background. It is related to the field of AI and BigData and is a regular in the top 10 rating of projects with the highest developer activity, according to the Santiment agency.
Speaking about the future prospects of NEAR, the expert currently sees the range for buying the coin as $4.5-$4.6, and the target marks as $6.3 and $8.2.
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