The anticipated altcoin season, characterized by explosive growth in cryptocurrencies beyond Bitcoin, has failed to materialize in the current market cycle. This absence starkly contrasts with the significant altcoin rallies witnessed in 2017 and 2021.
Analysts point to tightened global monetary policies and a subsequent reduction in speculative capital inflows as primary reasons for the subdued altcoin performance. Capital has instead concentrated heavily around Bitcoin.
This concentration is largely driven by surging institutional demand, fueled by the approval and adoption of spot Bitcoin Exchange-Traded Funds (ETFs) and significant participation from major financial entities like BlackRock. The resulting liquidity focus on Bitcoin has significantly limited momentum for alternative cryptocurrencies.
Compounding the issue, Ethereum (ETH), often considered a bellwether for the broader altcoin market, has underperformed relative to Bitcoin (BTC). This weakness has further hindered potential altcoin rallies.
Retail investor enthusiasm for altcoins has also waned. High-profile failures, including the collapse of Terra’s UST stablecoin and the FTX exchange, coupled with substantial losses from volatile memecoin investments, have dampened speculative interest.
Analyst Miles Deutscher has developed an AI-driven model to identify potential triggers for an altseason. Key indicators flagged by the model include significant shifts in Bitcoin’s market dominance and decisive price action by Ethereum against Bitcoin.