The first phase of the crypto bull market is mainly characterized by sector rotation, while the second phase is marked by accelerated capital inflow into strong sectors and targets. At this time, the rotation effect gradually weakens, and the market requires strong sectors to demonstrate exceptional capital-absorbing capabilities. Therefore, frequent rotations may miss opportunities, and long-term positioning is a wiser strategy.
Is the altcoin season coming?
Bitcoin is the leader of digital currencies. When Bitcoin's market share shows an upward trend, it usually indicates a large inflow of funds into the Bitcoin market, which often leads to the altcoin market entering a relatively sluggish stage, meaning that altcoins enter a bear market.
On the contrary, if Bitcoin's market share declines, this may signal a flow of funds to other digital currencies, especially altcoins, which often indicates the arrival of a bull market for altcoins.
Looking back at history, we can see that in the past few altcoin bull markets, Bitcoin's market share has significantly declined. Now, Bitcoin's market share has fallen below the boundary of its upward channel, which inevitably reminds people of the booming altcoin market in 2017 and 2021.
In March 2017, Bitcoin's market share dropped from 80% to 30%, followed by the explosion of the altcoin bull market; in January 2021, Bitcoin's market share fell from 70% to 40%, which also triggered the altcoin bull market. Now, in December 2024, Bitcoin's market share is at 56% and has already fallen below the upward channel. If this trend continues, we may be witnessing the arrival of a new altcoin season.
The last time Bitcoin's market share plummeted was in January 2021, after which altcoins began to rise. Until June 2023, Bitcoin surged while altcoins continued to decline, resulting in retail investors holding losses. Now, Bitcoin's market share has fallen below the upward channel, which may indicate that a new round of altcoin season is about to arrive.
The flow of funds during the altcoin season
The rise of altcoins = Bitcoin breakthrough × Ethereum trend.
Bitcoin drives the overall market, while Ethereum amplifies the market's risk appetite. A breakthrough in Ethereum's high point is the true signal for the start of the altcoin season: 1. Ethereum's rise drives mainstream assets to strengthen; 2. After mainstream assets rise, funds gradually flow into high-risk altcoins.
This constitutes a clear transmission chain: Bitcoin → Ethereum → Major coins → Mid and small-cap coins → Various altcoins begin to rise crazily → Bull market ends, entering a long bear market.
The launch of the altcoin season typically starts with the rise of some innovative projects, such as:
Some emerging projects: such as SUI;
Some MEME coins and air coins: such as PNUT, PEPE, VIRTUAL;
Some undervalued established altcoins: such as XRP, XLM, TRX, OM, etc.
With the crazy rise of altcoins, the market will enter an extremely enthusiastic state, which can also be seen as a warning signal, indicating that a market reversal may occur.
Summary
December's crypto market presents both opportunities and challenges. Pullbacks during the bull market are good opportunities for positioning. Holding quality crypto assets firmly is expected to cope with market fluctuations with ease. At this stage, focus on the ETH ecosystem, strong DeFi projects, and altcoins with resilience and strong narratives. Hold tight and prepare for the next round of accelerated market rise!