Everyone remember, the altcoin season has two prerequisites: the market must have very high certainty for a broad altcoin rally to occur, with 60% of altcoins rising more than BTC to be called altcoin season.
1. The liquidity environment has significantly improved (macroeconomic fundamentals):
Monetary policy shifts to easing
Fed interest rate cut expectations are met, lowering the risk-free rate and boosting risk appetite. If inflation is controllable (e.g., core PCE falls below 2.5%), liquidity easing will directly benefit altcoins.
Current Progress: Powell signals a rate cut in September, but it has yet to materialize; liquidity improvement is still in the expectation phase.
Incremental funds entering the market
Stablecoin exchange reserves exceed $80 billion (currently about $60 billion), indicating that new funds are preparing to enter. Ethereum spot ETF inflows continue to surpass Bitcoin outflows, forming early signals of capital rotation.
2. Institutional funds are allocating to altcoins (confidence catalyst)
ETF effect spreading: If mainstream altcoin ETFs like Ethereum and Solana are approved, they will attract institutional allocation.
Enterprise Treasury Strategy: Following MicroStrategy's Bitcoin holdings, more companies are starting to allocate to altcoins (such as ONDO, RNDR), boosting market confidence.
Current Progress: Institutions like BlackRock are increasing their positions in the RWA (Real World Assets) sector, but the overall institutional holding ratio in altcoins remains low.
3. Innovative Narratives and Sector Rise (Capital Carrying Entities)
Altcoin season requires a strong attractive new narrative to drive concentrated capital influx into specific sectors:
AI + Blockchain: Decentralized computing power demands (such as TAO, AKT).
RWA (Real World Assets): Tokenization of US Treasuries (such as ONDO), on-chain of physical assets.
Modular Blockchain: Underlying infrastructures like Celestia (TIA), Dymension (DYM), etc.
Blockchain Games and Metaverse: Projects with a large user base (such as PIXEL)
If there is a lack of clear main narrative, funding will disperse leading to a short-lived market.
4. Market Sentiment and Retail Participation (Explosive Force)
FOMO sentiment heats up: Social media (like the growth of crypto content on TikTok) and exchange activity surge, leading retail investors to drive up volatility.
ETH/BTC exchange rate breaks through: Ethereum rises strongly relative to Bitcoin (such as breaking 0.05), confirming a shift in risk appetite.
Current Shortcomings: Retail participation is still lower than in 2021, requiring meme coins (like PEPE) or new hotspots to ignite.
Conclusion: Current progress and missing links
Conditions are in place: Expectations of interest rate cuts are rising, Ethereum leads (ETH/BTC rebounds), and some institutions are positioning in RWA/AI sectors.
Awaiting breakthrough bottlenecks:
Bitcoin dominance needs to fall below 50% (currently about 58%);
Stablecoin reserves exceed $80 billion (currently a gap of $20 billion);
Regulatory clarity on the timeline for altcoin ETF rollout.
📌 Investor Strategy: Keep a close eye on BTC Dominance and ETH/BTC exchange rate. If both indicators break through thresholds, gradually allocate to leading tokens in the AI and RWA sectors (such as TAO, ONDO), avoiding chasing high without substantial application projects.
