I think it all comes down to a liquidity issue. The incentive for this bull market comes from the approval of spot ETFs. Without a doubt, BTC is the biggest beneficiary. A large amount of funds in traditional fields have exposure to investing in BTC. In theory, what we should see is a bull market for BTC alone.
However, this is not the case. As BTC has been rushing to new highs, altcoins and the endless stream of meme coins have also benefited from it. It seems that the view that "ETF funds will only flow into BTC" has not been verified.
When BTC is being driven up by funds from ETFs, a large number of investors in the cryptocurrency market who have made profits from this process begin to consider the layout of the next “altcoin season”. Therefore, they sell their precious BTC to institutions and buy their favorite altcoins instead. This process is the so-called BTC liquidity overflow.
With these funds, the altcoins are able to share the benefits from ETFs, which is why the altcoins have continued to rise in the past few months.
But compared with previous bull markets, this time the situation is different. The driving force of the previous bull market mainly came from the repurchase of on-site funds and the influx of new off-site funds. These funds are speculative in nature, so after BTC reaches its stage high, it will always tend to switch to small-cap currencies. This part of the liquidity overflow is comprehensive and unified, so we can often see that in the shock after BTC reaches a new high, the copycats have followed suit and broken new highs.
The main driving force of this "bull market" comes from ETF funds and the repurchase of on-site funds. At the same time, the new inflow of funds from the off-site market is far less than before. If you summarize the market value of mainstream stablecoins, you will find that the current total market value of stablecoins is just close to the level of 69,000 in the last bull market, instead of doubling again and again in the bull market as in the past.
This shows that even at the moment when BTC has already broken new highs, except for Bitcoin itself, the liquidity of the entire market is not sufficient. Add to that the liquidity sucked away by those Dogecoins with a market value of more than 1 billion, the active liquidity left for traditional copycats is actually very, very limited.
Therefore, when a pullback caused by an unexpected event occurs, the entire market will experience a synchronous outflow of funds in the same proportion. For BTC with extremely good liquidity, this means that the buy orders below the price are very uniform and thick, while for most traditional traders in the currency circle who have already filled their warehouses of altcoins, the buyer liquidity below the price appears to be very scattered and thin.
Hence the current phenomenon!
Many friends hope that I will analyze more about altcoins when I have nothing to do, but I always recommend keeping an eye on BTC in the current market because, in my opinion, BTC is the source of liquidity for the entire cryptocurrency asset class. When BTC continues to rise and break new highs, there is no need to worry about liquidity overflow. The same reasons that lead to the above phenomenon will also become the super fuel for altcoins when there is sufficient liquidity overflow, which means an increase far exceeding that of BTC.
And when the liquidity of BTC begins to decline, there is no need to pray for the altcoin in which you have a full position to create a "bullish miracle".
