What is altcoin season? My understanding is very simple.
1. First break through the price peak of March.
2. Then break through the historical high of 2021.
3. The process involves capital inflow - capital outflow
Funds flowing into BTC ➩ BTC's dominance increases ➩ Altcoins are drained ➩ Altcoins fall
Funds flowing out of BTC ➩ BTC's dominance decreases ➩ Altcoins attract liquidity ➩ Soaring prices
This chart is based on statistical analysis of the performance of the top 100 tokens by market capitalization, dividing these tokens into two categories: 'those that have broken through the price peak of March' and 'those that have not broken through the price peak of March,' each with 50 tokens. The data comes from the relevant information displayed in the chart.
1. From the price perspective, altcoin prices are still hovering at bearish levels.
Originally, I wanted to focus on the top 100 tokens by market capitalization to see how many of them broke through the price peak of March, but the result was that the number was insufficient.
So I continued to expand the scope until I reached the top 115 tokens by market capitalization, which provided a sufficient sample size. This means that among these top 115 tokens, only 50 successfully broke through the price peak of March.
Only 15 tokens (excluding new coins) have broken the historical high of 2021, and among those aligned with the March high, only 29 tokens outperformed BTC.
This might be our opportunity, how to choose the targets?
- As long as the project is still operational, with the codebase and social media updates ongoing, and if TG and Discord still have administrators, it is highly likely that institutions have already intervened to control the market.
- At the right time, with suitable gains and losses, within 7 days or even one day, it can yield three to five times, and within a month, it can erupt an accumulation of three to four years of fluctuation. The outbreak of altcoin season can complete the two-year bull market process of Bitcoin in just 7 days.
2. From an emotional perspective, the sentiment is still bearish.
Right now, all the chats are silent. The only wish in everyone's heart is to break even. Although Bitcoin's price continues to reach new highs, the assets in the wallets of group members are constantly shrinking.
Those who are truly at the end of a bull market have long lost their rationality. They have not only invested all their savings into the market but have also borrowed money from friends and relatives, taken out loans, and rushed in recklessly. Buyers of Bitcoin will envy those who buy altcoins; in such a frenzied atmosphere, as soon as one sells their coins, they will immediately miss the opportunity to buy back at the selling price. Market makers will use various messages and pump techniques to create this atmosphere, which clearly does not indicate the end of a bull market.
3. How to determine altcoin season: 4 essential indicators
(1) Altcoin index
Tracking market sentiment indicates whether it points to Bitcoin or altcoins. If 75% of the top 50 altcoins have outperformed Bitcoin in the past 90 days, then it is altcoin season; otherwise, it is Bitcoin season.
(2) BTC dominance (market cap ratio)
Funds flowing into BTC ➩ BTC's dominance increases ➩ Altcoins are drained ➩ Altcoins fall
Funds flowing out of BTC ➩ BTC's dominance decreases ➩ Altcoins attract liquidity ➩ Soaring prices
(3) TOTAL 2
TOTAL2 represents the total market capitalization of the top 125 altcoins excluding BTC, which can indicate the flow of funds into altcoins.
(4) ETH/BTC exchange rate
From the perspective of market cycles, the flow of funds generally goes: BTC → ETH → mainstream altcoins → second-tier altcoins → meme coins.
Bitcoin is faith, Ethereum is the leader, and the strength of Ethereum is the prerequisite for altcoins to soar. When the Ethereum exchange rate strengthens, altcoins can be appropriately monitored.
What the bull market fears most are: greed, fear, blind following, herd mentality, going with the flow, and chasing highs and selling lows, because it's where only a few people make money.
If you are afraid of missing out on altcoin season, the only thing you can do is find a high cost-performance entry point and set a stop-loss. As for whether it can break the historical high again, luck is very important.
So what trading opportunities do we still have? A chart tells you:
$ME $MOVE $XRP
