This time, Bitcoin's rise has not been followed by altcoins, with Bitcoin's market share currently reaching 64.2%, a new high in four years. Although it is still uncertain when the altcoin season will arrive, we can observe which altcoins perform better than Bitcoin during periods of market turbulence to identify funding preferences, and there is a high probability that strong performance will continue in the future.

Which tracks should we focus on?

Key areas to focus on: AI, L1, Meme, and DeFi.

AI

The previous narrative was initiated by AI, starting from the combination of GOAT and memes, followed by exploration of more possibilities and applications. Under the AI fervor, it led to a bubble, and the bubble burst under the continuous issuance of coins by the Trump family, ultimately causing most AI tokens to drop over 90%, reshaping valuations.

The bursting of a bubble does not mean the end of a track, but rather a mechanism for eliminating projects of uneven quality in the market. This means that with the continuous development of Web 2 AI, Web 3 AI projects have already undergone a round of reshuffling. If we believe that Web 2 AI can transfer to Web 3, then the current valuation of the AI track is relatively cheap, and the fundamentals of the remaining projects have been tested. If the altcoin season arrives in the future, this track is expected to absorb the liquidity that overflows from Bitcoin.

VIRTUAL, ARC, ALCH, SWARMS, Zerebro

L1

Public chain coins have always been a relatively stable choice when the altcoin season arrives. The overall logic is that the development of public chains determines the ceiling of the ecological projects under them, and they can also capture the most liquidity.

However, unlike in 2021, funding is no longer paying for 'EVM copy-paste', but is seeking public chains that can truly bring new applications through TPS and developer tools. Once specific catalysts (exchange listings, institutional storage) appear, price elasticity is significantly higher than that of old L1s.

Monad, MegaETH

Meme

Bitcoin is the largest meme coin in the entire cryptocurrency circle. Meme coins have already become a prominent subject in this cycle and are highly likely to continue to survive in the future. The key factor is that meme coins are carriers of consensus and culture, and the leading meme coins of various public chains can also be seen as leveraged versions of public chain coins. Meme coins are mostly native on-chain, and their pricing power is not monopolized by centralized exchanges, making them prone to wealth effects. As long as there is a wealth effect in the cryptocurrency circle, there will be endless liquidity and participants.

DeFi

In the cryptocurrency circle, DeFi is a rare track with a real business model. Perp Dex and Dex earn trading fees; lending can earn interest rate spreads; Yield Farming earns deposit and withdrawal fees; LaunchPad earns token issuance fees.

HYPE, JUP, and AAVE are all dominant players in the DeFi space. More importantly, they all have token buyback mechanisms, meaning that with the arrival of the altcoin season, increased liquidity raises trading volume. Due to the network effects of leading DeFi protocols, the overall projects will also see higher profitability, and higher profitability means stronger buyback efforts. When the demand for tokens increases, the likelihood of sustained price increases also rises.

When will the rotation market come?

The start of the altcoin season means that funds are flowing from Bitcoin to riskier, smaller-market-cap altcoins. Therefore, there are two key observation indicators: first, whether Bitcoin can hold above 90,000, providing the market with a stable confidence anchor; second, and more importantly, whether Bitcoin's market share (BTC.D) can begin to decline, reflecting a shift in funding preferences.

Currently, we are still in the stage of 'funds concentrated in BTC, stable growth of the reference'. If BTC.D starts to decline significantly, for example, returning to the 57% level seen at the beginning of this year, it will be a signal that funds are officially overflowing into the altcoin market, at which point the 'rotation market' will have the opportunity to fully unfold.

In other words, the real starting point of the altcoin season is not only Bitcoin continuously reaching new highs but also an increase in risk appetite and funds spreading from BTC to other thematic tracks. When both occur simultaneously, we will have the opportunity to see a comprehensive revitalization of the overall market. Now is the time to observe, screen, and position.