Is the Altcoin Season Over?

The market has been going through a significant change. As a result of this change, Bitcoin surged. Institutional interest drove that. With this

CryptoQuant CEO Ki Young Ju has advised that altcoins must stop relying on Bitcoin’s surge to fuel their growth. Instead, they should develop their strategies to attract fresh investment.

He emphasized that the altcoin season is in doubt without a new influx of capital distinct from Bitcoin’s. Moving forward, the altcoin sector as a whole will struggle to achieve new all-time highs.

“For altcoins to reach a new all-time high market capitalization, they will require a significant influx of fresh capital to crypto exchanges. The altcoin market cap below its previous ATH indicates reduced fresh liquidity from new exchange users.”

“Altcoins should focus on developing independent strategies to attract new capital rather than relying on Bitcoin’s momentum,” the analyst concluded while clarifying that he is still “bullish” on altcoins.

The altcoin market cap has yet to recover its previous all-time high. So, the influx of new liquidity is crucial for the altcoin season to manifest ahead. That will help drive growth and reach new record levels.

Institutional investors may purchase significant altcoins through ETFs. The Ki Young Ju noted that smaller altcoins still depend on retail investors on crypto exchanges for their purchases.

This disparity in capital flow is hindering the typical breakout of altcoins, and altcoin season is not able to come, Ju explained. He clarified that the slower market cap growth of altcoins, compared to Bitcoin, will result in a rise in BTC dominance.

Is Bitcoin’s Price Rally Being Driven by Institutional Demand?

Bitcoin’s rally contrasted sharply with previous cycles driven by retail speculation. Today, institutional investors and spot ETFs dominate the capital flow. That pushed the Bitcoin price higher.

These institutional players tend to focus on long-term investments rather than short-term trades. That makes them less inclined to divert their capital into altcoins.

Also, this shift poses a challenge for smaller altcoins. These have historically relied on retail liquidity from exchanges for growth. Bitcoin usually benefits from steady institutional support. This provides price stability as altcoins rely on a shrinking retail investor base for their trading volume.

Ki Young Ju emphasized that for altcoins to recover sustainably, new capital must flow through exchange-based trading. That could be triggered by retail investors’ fear of missing out (FOMO).

He highlighted that only a handful of altcoins will likely attract new capital. On the other hand, an altcoin season may eventually arrive. However, it will benefit only a few; not all altcoins will reach their previous all-time highs.

Ju also stated- ”That is a season for Total 3, not an “altcoin season” in the traditional sense where anything outside of #Bitcoin is considered an altcoin.”

Institutional investors can access major altcoins through ETFs or similar products. However, the smaller altcoins cannot draw such funding.

Without a boost in capital from exchange users, altcoins will struggle to reach their former market highs. This will limit their role in the broader crypto market rally.

In October 2024, renowned trader Willy Woo predicted that altcoin seasons would progressively weaken with each market cycle. The trader told his followers on social media:

“There will be echo fractals of mid-caps and low-caps pumping after BTC pumps as investors chase returns higher on the risk curve. This is a normal part of markets, and we see this in equities — it’s just alt seasons will be weaker each cycle on from the great 2017 alt bubble.”

Challenges with Liquidity and Saturation in the Altcoin Market

The “TOTAL” ticker on TradingView tracks the total cryptocurrency market capitalization. It dropped to $3.04 Trillion on November 26th. However, it has since been recovering. When writing, it has reached $3.23 Trillion.

This rebound is driven by positive buyer sentiment. That aims to retest the current bull run’s developed peak at $3.36 Trillion. However, despite Bitcoin’s rise, altcoins have struggled to maintain consistent growth. They have often experienced price corrections after Bitcoin rallies.

In previous bullish phases, altcoins were more profitable than Bitcoin due to their lower trading volumes and higher volatility. However, with increasing altcoins flooding the market, investors have been diversifying their capital across multiple projects.

Similarly, this trend is being further complicated by meme coins. These coins are capturing the attention and liquidity of retail investors, diverting funds away from other altcoins.

Previously, leveraged trading was key in driving altcoin activity and was crucial to starting altcoin season. However, retail traders are now more focused on the high-risk, high-reward potential of meme coins.

For altcoins to thrive in the current environment, they will need to showcase solid fundamentals and clear use cases. They also need the ability to attract sustainable liquidity.

Is it Time to Update Development Strategies for Altcoins?

Altcoins need to move away from depending on Bitcoin’s momentum and focus on