Will the altcoin season explode or will $BTC crash?
The market is stuck at a critical point, with the altcoin index at 53, like a seesaw's midpoint. A rise to 60 may trigger an altcoin frenzy, while a drop to 45 means holding onto Bitcoin tightly. An index above 75 indicates a strong altcoin season, while below 25 signifies a strong Bitcoin season. Currently at 53, the market is oscillating between stability and speculation.
Historically, this index has been extreme: it soared to 98 in 2018, dropped to 8 in 2019, surged to 91 in 2021, and has been stuck at 53 so far in 2023. There have been changes in the market this year, with the index rebounding from 36 to 53 from February to August, indicating a catch-up for altcoins and increased volatility. On-chain data shows that BTC accounts for 51%, and USDT has increased by 2.1% monthly. Macroeconomically, the Federal Reserve's interest rate cuts and net inflows into BTC ETFs are favorable, but there are risks from the SEC lawsuits and Tether controversies.
In terms of operations, watch the index: if it rises to 60, focus on high-volatility sectors with 70% allocated to altcoins and 30% to BTC; if it drops to 45, quickly switch to BTC/ETH with 80% in mainstream assets and 20% in stablecoins; if it stays at 53, maintain a balanced allocation.
Small-cap coins are liquidity traps and can easily lead to liquidation; at critical points, volatility can be swift, potentially rising from 53 to 80 or dropping to 20 in 2-3 weeks. Q3-Q4 this year is a key period for market shifts; if BTC ETFs propel BTC past 73,000, the index could rise rapidly, kicking off the altcoin season. But don't forget the crash of LUNA/FTX in 2023, when the index plummeted from 65 to 22 in one week—black swans can appear unexpectedly!
It is advisable to check the index weekly; pursue gains only after it sustains above 60 for three consecutive days. Maintain dynamic balance for now and avoid blindly betting on direction.
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