As Bitcoin breaks through its all-time high, the crypto market eagerly awaits the next “altseason” which is a phase where altcoins outperform BTC and deliver impressive returns. Historical trends, macroeconomic factors, and on-chain metrics can help pinpoint when altseason might kick off. Here’s an analysis of the timing and signals to watch for a strategic entry.
Bitcoin Stabilizes at ATH
Bitcoin’s recent rise to $92,000 has sparked excitement across the crypto market. Historically, when BTC reaches a new ATH and stabilizes, capital flows shift towards altcoins as investors seek higher returns in other assets. If BTC consolidates at these levels over the coming weeks, altseason could soon follow.
Large-Cap Altcoins Lagging
Ethereum and Solana are essential indicators of altseason. Both major altcoins remain below their 2021 ATHs. ETH is down 32%, and SOL by 17.5%. In the previous cycle, after Bitcoin reached its ATH in Q4 2020, large-cap altcoins like ETH and SOL followed with new highs in Q1 2021. This cycle may mirror that pattern, with ETH and SOL likely to break out first, signaling the broader altcoin rally.
Impact of Federal Reserve’s QT Policy
The Federal Reserve’s Quantitative Tightening (QT) has created headwinds for altcoins, as liquidity has been constrained. A potential end to QT, expected to be discussed in the December 2024 FOMC meeting, could mark a shift. If the Fed pauses QT, it may inject confidence into the market, spurring capital flows into altcoins and triggering altseason as early as Q1 2025.
With Bitcoin’s rally, mainstream interest has surged, reflected in higher search trends for BTC and related terms. Historically, increased retail interest signals a shift towards altcoins as investors look for “cheaper” options. Search terms like “cheapest altcoin” and media coverage of crypto often indicate the beginning of altseason, driven by retail investors’ FOMO.
On-Chain Metrics
On-chain data supports the case for altseason. Indicators like the MVRV Z-Score (currently at 2.9) and the Puell Multiple (at 1.02) suggest the market isn’t overheated yet. Additionally, Bitcoin’s low futures funding rate during its $80K breakout shows demand wasn’t driven by leverage alone, indicating room for further growth. This genuine demand could spill into altcoins as Bitcoin stabilizes.
Preparing for Altseason
With Bitcoin at new highs and market signals pointing to altseason, December 2024 to Q1 2025 is a likely time frame for altcoin rallies. For a strong entry, monitor BTC’s stabilization, ETH and SOL testing their highs, and any Fed policy shift. Start with large-cap altcoins like ETH and SOL, which tend to lead altseason, and avoid FOMO and leverage trading for a strategic, safer approach.
By tracking these indicators, you can time your entry effectively and maximize gains in the upcoming altseason.
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