With major events such as Bitcoin halving in the digital currency market, the performance of altcoins has attracted much attention. 👀

However, we often see some altcoins gradually exiting the market, which raises questions about the life cycle of altcoins and how investors should respond to market changes.

The birth and death of most altcoins is a long-standing topic in the field of digital currency. Although they have their own characteristics, most of them try to become a substitute or supplement to Bitcoin.

However, factors such as technical problems, security breaches, management difficulties or market loss of interest led to their exit.

Investors face challenges from market competition and uncertainty and need to pay close attention to market trends and flexibly adjust their investment strategies.

This article will explore the phenomenon of altcoins soaring after the Bitcoin $BTC halving and the reasons why the "altcoin season" failed to appear, and provide investors with suggestions for optimizing strategies to help them make wise investment decisions.

🟡What is "Copycat Season"?

"Alt Season" refers to a period of time when altcoins outperform Bitcoin, causing their prices to soar across the board. During this period, investors are optimistic about the altcoin market, and the cryptocurrency market is booming, just like a rising tide that lifts all boats. The alt season has driven the growth of almost all cryptocurrency tracks, and a large amount of liquidity has poured into the market, which has become an important driving force for the rapid development of the altcoin market.


🟡Liquidity Tracking

1️⃣ From a historical perspective, it mainly comes from two aspects:

2️⃣ Retail capital inflows from centralized exchanges (CEX).

Outflows from Bitcoin on CEXs and into altcoins on CEXs.

This liquidity will gradually flow down the "ladder" of market capitalization rankings. This phenomenon is called "the road to the cottage season" by industry insiders and is a widely recognized phenomenon.

🟡The Lalapalooza Effect

The disappearance of the alt season and investors' response to challenges "The road to alt season" in 2021 left a deep mark, but now it seems to have disappeared without a trace. This is not due to a single factor, but the result of multiple factors working together. As the famous investor Charlie Munger said, this phenomenon is the embodiment of the "Lalapalooza effect" - multiple interrelated factors superimposed to produce a huge impact.

1️⃣ Project saturation:

Despite ample market liquidity, the project landscape is incredibly saturated. Similar to the ocean being filled with ships, the true tide of “altcoin season” can only be felt in certain areas, such as the $AI or $SOL ecosystems. But now, what was once a “rising tide lifts all boats” has morphed into a selective rotation game. Investors need to recognize this and adjust accordingly.

2️⃣ Increased adoption:

While the increased adoption rate in traditional fields has enhanced the credibility of cryptocurrencies, it has also increased the intensity of competition in the industry. The influx of more smart people has made it more difficult to find industry opportunities.

3️⃣ Bitcoin ETF:

The approval of the Bitcoin spot ETF has changed the landscape of the altcoin market. The way investors buy Bitcoin through ETFs has made the path to the altcoin market less direct, which has had a certain impact on altcoins.

4️⃣Token Dilution:

The oversupply of tokens is an invisible "handbrake" that kills alt seasons like the one in 2021. The dilution caused by token unlocking absorbs a lot of liquidity, making it difficult for prices to rise. This oversupply situation makes it difficult for alt seasons to continue.

5️⃣ Impact of COVID-19:

The 2021 alt season was largely affected by the special circumstances. The high capital flows and long hours of screen time under the lockdown measures made cryptocurrencies attractive to a large number of retail investors. However, as the epidemic is gradually brought under control, the end of this special situation means that the alt season is no longer a success.

🟡The disappearance of altcoins can be attributed to a variety of factors

1️⃣ Market saturation:

As time goes by, more and more altcoins appear in the market, leading to market saturation and fierce competition. This makes it impossible for many altcoins to stand out and eventually be eliminated by the market.

2️⃣Regulatory pressure:

As the altcoin market flourishes, regulators are beginning to impose stricter regulations on it to curb market risks and protect the interests of investors. This regulatory pressure may force some altcoin projects to cease operations or face strict restrictions, thus weakening market vitality.

3️⃣Technology is backward:

Some altcoin projects may lag behind other competitors technologically, fail to provide sufficient innovation and value, and thus lose market competitiveness.

4️⃣ Investor confidence declines:

As the volatility of the altcoin market increases and regulatory pressure grows, investor confidence may gradually decline, causing them to reduce their investment in altcoins, which in turn affects the market's activity and development prospects.

🟡What strategies should users adopt in the current market environment?

1️⃣ Diversified Investment:

Diversify your investments across different asset classes and projects, including traditional assets such as stocks and bonds as well as robust cryptocurrency projects. This helps reduce overall investment risk.

2️⃣ Strengthen risk management:

Before investing, be sure to conduct sufficient research to understand the fundamentals and potential risks of the project. At the same time, set a stop loss point and adjust the investment portfolio in time to avoid potential losses.

3️⃣ Pay attention to regulatory developments:

Pay close attention to regulatory authorities' policy adjustments and regulatory measures on the cryptocurrency market, and adjust investment strategies in a timely manner to adapt to changes in the regulatory environment.

4️⃣Technological innovation and practical application:

Priority will be given to cryptocurrency projects with technological innovation and practical application scenarios, which are more likely to gain recognition in the market and maintain long-term development.

5️⃣ Raise investment awareness:

Continue to learn and improve investment knowledge, understand market dynamics and trends, maintain a calm and rational investment attitude, and avoid blindly following the trend and risky speculation.

🟡 Conclusion

In the wave of the digital currency market, the rise and fall of altcoins are all part of market development.

Whether it is a prosperous copycat season or the dissipating fog, investors should always remain vigilant and continue to learn in order to cope with the volatility of the market.

Diversified investment, risk management, regulatory attention, project selection and investment awareness are important strategies to meet market changes. In the ups and downs of the market, calmness and rationality are the key to steady progress and long-term returns.

I hope that investors can ride the waves, forge ahead bravely, overcome all obstacles, and finally reap rich rewards on the journey of digital currency.

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