Key Points
- Altcoins need to separate from Bitcoin’s influence to trigger a significant rally, says CryptoQuant CEO Ki Young Ju.
- Bitcoin’s dominance in the crypto market is peaking, suggesting a potential altseason with Ethereum reaching a record high.
Despite altcoins’ impressive performance in 2024, the anticipated altseason has not yet kicked off a significant rally in this sector. Ki Young Ju, the CEO of CryptoQuant, has provided some insights into why this altseason is delayed. He believes that altcoins need to decouple from the Bitcoin price movement and Bitcoin’s market dominance.
Factors Influencing Bitcoin Price
Ju highlights that, unlike past cycles, the current Bitcoin price rally is driven by institutional investors and spot ETFs, not retail traders on crypto exchanges.
Institutional investors and ETF buyers, Ju notes, usually do not shift their assets from Bitcoin to altcoins. Furthermore, as they operate outside of crypto exchanges, it becomes challenging for them to transfer funds between Bitcoin and altcoins via OTC trades.
While some institutional investments may flow into major altcoins through ETFs or other vehicles, smaller altcoins still heavily depend on crypto exchange users for capital.
Altcoins and Fresh Capital
For altcoins to reach new all-time high market capitalizations, a significant influx of fresh capital is needed on exchanges. However, the current altcoin market cap remains below its previous all-time high, indicating a lack of new liquidity from exchange users.
Ju suggests that if retail investors return to Bitcoin, this could reignite exchange user activity and potentially trigger an altcoin season. However, he emphasizes that future Bitcoin growth is likely to come from institutional investments, ETFs, and possibly government involvement, rather than from retail traders.
Ju also advises that altcoins should focus on developing independent strategies to attract new capital, rather than relying on Bitcoin’s momentum to drive their growth.
Bitcoin Dominance and the Altseason
Crypto market analysts predict that Bitcoin’s dominance in the crypto market is peaking and the capital rotation into altcoins will begin soon. This could lead to a probable altseason along with the Ethereum price hitting an all-time high.
The Total3 Index, which tracks the market capitalization of cryptocurrencies excluding Bitcoin and Ethereum, has experienced a significant rally over the past three weeks, reaching levels not seen in three years. This surge is fueling speculation that an altcoin season may be underway.
Last week, the Total3 Index hit new cycle highs, marking its largest move since April 2021, with a 23.2% surge. The total market capitalization of these assets is approaching its May 2021 high of $984 billion.
According to the latest Bitfinex Alpha report, there’s notable strength. Bitfinex analysts suggest that the recent rally in the altcoin market is due to ongoing developments in the regulatory landscape.
The report notes, “We have moved past the April 2022 high for altcoins, which was widely regarded as the “start of the bear marketˮ, after which the next impulse down formed the 2022 bear market lows for altcoins. We believe an ascent past these levels indicates the rotation of speculative capital and interest from Bitcoin into altcoins as retail market participation increases.”
