Altcoin Season: Has it Arrived or is it Just a False Alarm?

Recently, old coins have surged dramatically, with funds continuously flowing out of BTC. Various signs seem to indicate that the altcoin season has quietly begun. I feel that during the last and the one before that, the 'old altcoins' had little chance of outperforming BTC, but 'new altcoins' (such as meme coins, AI Agents, etc.) have great potential, and their wave is already showing early signs.

So, what is the exact signal that the altcoin season has arrived? I believe trading volume is key. When the TOP 20 mainstream CEX spot/futures trading volumes are occupied by new altcoins, and the trading volume rises rapidly, that will be a clear trumpet call for the next wave of market movement. Currently, we have actually stepped into the altcoin season, but this time it is quite different from the past. In this cycle, from 2021 to 2023, VC investment scale has grown exponentially, not without irrational factors. Excessive investment, low financing valuations, and the demand for fund exits have left the chip structure precarious, ultimately affecting the secondary market. Therefore, this altcoin season is more favorable for tokens with fair issuance or for older tokens with extremely high circulation.

From the perspective of community activity, when BTC rose from 50,000 to 60,000, the trading groups were quite quiet, as each time BTC reached a new high, it would siphon off funds from altcoins. Now, however, old altcoins like DOGE, XRP, and HBAR have surged several times, and the crypto community is filled with reports of huge gains, indicating that many people have hoarded a lot of altcoins, while the proportion of retail investors holding BTC is not high. In terms of data, altcoin market fees remain high, and on-chain data shows that the frequency and quantity of market maker addresses depositing and withdrawing altcoins from exchanges have significantly increased, all of which supports the arrival of the altcoin season.

However, we also cannot be blindly optimistic. On one hand, a large number of tokens from early financing projects will gradually unlock over the next two years. If there are no new users to take over, prices may struggle to be sustained. On the other hand, current market innovations are concentrated in the PayFi and stablecoin sectors, lacking application scenarios that can shock the entire market like DeFi Summer did; the scarcity of new narratives limits investors' imagination. Furthermore, institutional funds are mostly directed towards compliant products like ETFs, showing little interest in altcoins. In the absence of incremental funds to drive the market, the altcoin season may find it difficult to recreate its former glory.