Most cryptographic merchants have anxiously anticipating what in the cryptographic world is known as Altcoin season or “alternative season” for abbreviation: that crazy period when the altcoins achieve incredible profits and become parabolic. Many have repeatedly asked their arrival, just to demonstrate again and again. Instead of the expected increase in Altcoins, Bitcoin’s domain has continued to increase throughout the current market cycle.
In a recent video, well -known YouTuber analyst Benjamin Cowen Examine why the alternative season has remained difficult to achieve and presents the factors that he believes have contributed to this trend and what can be expected in the future.
Understanding of the alternative season
Before immersing yourself in why the alternative season has not happened, it is important to define what the alternative season really means. While some investors may feel that small demonstrations in Altcoins constitute an alternative season, the true Alt season is marked by a strong decrease in Bitcoin’s domain along with significant earnings in Altcoin’s pairs to USD.
Historical data show that there were two clear alternative stations in previous market cycles: one in 2017 and another in 2021. During these periods, the Bitcoin domain collapsed and alternative alternatives experienced explosive growth. However, outside these moments, Bitcoin’s domain has generally had an upward or stable trend, which means that alternative profits have been limited compared to Bitcoin’s performance.
However, the current market does not resemble the alternative stations of the past. Since 2022, Bitcoin’s domain has increased constantly, and Altcoin’s performance in relation to Bitcoin has continued to deteriorate. This has led many to question why the alternative season has not materialized.
Why have calls for the alternative season been wrong?
There are several reasons why analysts and influencers have constantly judged the arrival of the Alt season.
1. The desire for rapid profits
Many investors enter the cryptocurrency market in search of fast profits. Historically, Altcoins has offered greater potential for huge yields compared to Bitcoin, which leads to a frequent speculation that an alternative season is just around the corner. However, in reality, Bitcoin has been the most stable and lucrative investment in recent years, offering profits consistent with less risk.
For traditional investors, 6x yield in two years would be considered extraordinary. Bitcoin has achieved this level of growth since its lower part, however, some investors remain dissatisfied and continue to chase high risk altcoins in the hope of achieving even greater performance. However, not recognizing the absence of the alternative season has led to losses for many who have become prematurely altcoins.
2. Bitcoin as a safe shelter asset
A key reason why Altcoins has had problems is the importance of calling portfolios in Bitcoin instead of USD. Instead of evaluating Altcoin’s performance in terms of dollar, experienced investors evaluate them in terms of Bitcoin value. When alternative relationships to Bitcoin decrease, it becomes evident that maintaining Bitcoin is the upper strategy.
For example, in 2021 and 2022, a Bitcoin was worth approximately 11 Ethereum (ETH). Today, that same Bitcoin is worth around 36 eth. This means that Bitcoin headlines have tripled their ETH holdings simply by staying in Bitcoin instead of changing Altcoins. This trend illustrates why calling portfolios in Bitcoin is a more effective strategy during certain market conditions.
3. The increase in Altcoins supply
A common argument for the alternative season in recent years has been the large number of new altcoins that enter the market. Many believed that with so many new chips created, Bitcoin’s domain inevitably would decrease. However, this assumption was defective.
While the number of Altcoins has increased, the total amount of liquidity in the market has remained relatively constant. Instead of more money that flows to Altcoins, the available liquidity has extended thinner in a greater amount of assets. This dilution has prevented any significant increase in Altcoin market capitalization in relation to Bitcoin.
The role of macro conditions
Another crucial factor to understand the absence of the ALT season is the macroeconomic conditions, specifically the monetary policy of the Federal Reserve.
1. Quantitative tight
One of the strongest arguments against an imminent alternative season is the continuous policy of the Federal Quantitative Adjustment Reserve. Historically, the Alt season has coincided with periods of loose monetary policy, as in 2017 and 2021, when the Fed was not actively tightening liquidity.
During these cycles, Bitcoin domain decreased as excess liquidity in the financial system allowed investors to assume a higher risk, which caused greater speculation in the Altcoins. However, since 2022, the Fed has maintained a restrictive monetary posture, which limits the risk appetite in the market. This has led to a constant decrease in Altcoins’ performance in relation to Bitcoin.
2. The impact on Bitcoin and Altcoins
History has shown that Bitcoin’s funds and tops are often aligned with changes in monetary policy. In the previous cycle, the Bitcoin domain only began to decrease after the Fed ended its hardening policies. This time, a similar trend is developing, and Bitcoin continues to surpass Altcoins provided that the tight liquidity conditions persist.
Looking at the key proportions of Altcoin-bitcoin, such as Ethereum-to-Bitcoin (ETH/BTC), we can see that Altcoins has continued to lose value against Bitcoin. This reinforces the idea that until the Fed moves away from its current policy, Altcoins probably continues to have a lower performance.
Retail participation and market feeling
Another important factor that contributes to the lack of alternative season is the absence of a strong presence of retail investors.
1. Social risk metrics
A critical element of the previous alternative stations was the presence of strong participation in retail investors. This can be measured using social risk metrics, which track the level of exaggeration and commitment in the cryptocurrency space.
In 2017 and 2021, these metrics showed sustained increases, reflecting the growing retail enthusiasm. However, in the current cycle, social commitment has remained relatively silenced, suggesting that the retail frenzy required to drive an alternative season has not yet returned.
2. Bitcoin domain over other crypts
Retail investors often enter the market at the end of the cycle, buying Altcoins at the top of exaggeration. However, the current environment lacks the same speculative fervor seen in previous cycles.
Bitcoin is reaching new maximums, but most Altcoins, including Ethereum, have not yet followed their example. This divergence highlights the different market conditions compared to the previous alternative stations.
What should happen to start for the alternative season?
So that the alternative season really begins, Cowen believes that several key conditions must be met:
- A federal reserve pivot – The Fed needs to pass the quantitative adjustment to a more accommodated monetary policy. Until the liquidity conditions improve, the risk appetite by the Altcoins will remain low.
- Bitcoin domain decline – A significant fall in the Bitcoin domain is necessary to indicate the beginning of a true alternative season. Until now, the domain has only increased, reinforcing Bitcoin’s force.
- Arises from retail participation – A return of retail enthusiasm, measured by social risk metrics and commercial volumes, would be a key indicator of an imminent alternative season.
- Capitulation of Altcoins -Atcoin’s pairs to Bitcoin still have space to reject before the bottom. Historically, Altcoins only begin to recover after a period of extreme capitulation.
Final thoughts
While many have anxiously anticipated the alternative season, the reality is that market conditions have not yet aligned to support one. Until the key liquidity and macroeconomic factors change, Bitcoin is likely to remain the strongest asset in cryptographic space. Investors who have stayed in Bitcoin instead of changing Altcoins have seen significantly better yields, and many of those who have jumped to Altcoins too soon have seen low performance.
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