Bitcoin is surging, will the season of "mindless money-making" in the altcoin frenzy arrive as expected?

Written by: Jake Pahor

Compiled by: Frank, Foresight News

Bitcoin has soared above $60,000, but why are the altcoins we hold lagging behind?

No need to panic; in the long run, the altcoins in everyone's hands are currently one of the most favorable long-term investments.

This article is the latest report from crypto researcher Jake Pahor, who has conducted a detailed study of the current altcoin market, exploring it from multiple angles including market cycle phases, Bitcoin's dominance, ETH/BTC exchange rate, stablecoin inflows, DeFi TVL, and whether new retail investors are entering the market. Foresight News has compiled the full text.

Market Cycle Phases

In the early stages of a bull market, Bitcoin often absorbs most of the liquidity and rises first (Phase One), leading to an increase in Bitcoin's dominance.

During this period, most altcoins (though not all) typically underperform compared to Bitcoin; in fact, this is a sign of a healthy market.

Bitcoin Dominance

The higher Bitcoin's dominance in the market, the more likely we are to see a prolonged altcoin summer afterward.

The market dominance of BTC briefly fell below the 20-week moving average in January 2024 but has since rebounded and stabilized at 55% (a key resistance level). If this resistance is broken, the next resistance level could reach 58-60%.

Ultimately, BTC's market dominance will peak in the cycle and begin to decline.

As risk appetite increases, capital will sequentially shift to ETH → large-cap blue-chip coins → altcoins, "history does not repeat itself, but it often rhymes."

ETH/BTC Exchange Rate

Now let's look at the chart data for the ETH/BTC exchange rate; the same situation has occurred, but in the opposite direction------since December 2021, the ETH/BTC exchange rate has been in a long-term downtrend.

In January 2024, the ETH/BTC exchange rate briefly experienced a false breakout above the 20-week moving average, leading many to mistakenly believe that the trend was about to change.

However, we have since retraced again and are retesting the resistance level of the 20-week moving average.

If the ETH/BTC exchange rate falls below the previously key resistance level of 0.05, we may see the exchange rate plummet to lower levels.

However, if the subsequent ETH/BTC exchange rate treats this 0.05 as a new support level, it could indicate that Ethereum is gradually becoming strong and may mark the beginning of the second phase of the market cycle, which could coincide with the approval of spot Ethereum ETFs.

Stablecoin Inflows

Since 2022, the market capitalization of stablecoins has been in a strong downtrend, consistent with the bear market characteristics of capital continuously flowing out of the crypto space.

However, from the data, it seems that a bottom has formed in the fourth quarter of 2023:

• In October 2023, the market cap of stablecoins = $124 billion;
• In February 2024, the market cap of stablecoins = $141 billion;

This represents a total growth of 14%, so the bull market is closely related to the inflow of stablecoin capital.

DeFi TVL

TVL is often seen as a lagging indicator; however, it is still useful for checking and understanding overall trends.

Since June 2022, DeFi TVL has been fluctuating within a range ($35 - $65 billion). However, entering 2024, it appears we are breaking out of this range:

• In October 2023, DeFi TVL was $36 billion;
• In February 2024, DeFi TVL was $86 billion;

In just 4 months, DeFi TVL surged by 239%!

Are New Retail Investors Entering?

New retail investors from outside the market have definitely not entered yet (at least not at this moment), as my family and "outside" friends have not sent me any information about cryptocurrencies, and I can't find any relevant reports in the news.

The Google search trends for "Bitcoin" and "Crypto" peaked in May 2021, which was after Bitcoin's price reached $64,000.

But currently, the investment interest from new retail investors remains very low------the corresponding scores are 19% and 29%.

However, it can be seen that retail investment interest is recovering; the most direct evidence is that due to overwhelming demand, the Coinbase app briefly crashed, and its ranking in the app store is rapidly climbing.

• Current ranking = 165;
• Historical lowest ranking = 500;
• Historical highest ranking = 1;

So when it reaches the number 1 ranking again, we will undoubtedly be at the peak of the bull market.

Overall, I still find it hard to believe that BTC has broken through $60,000, and we are just a stone's throw away from the historical high.

However, with so many catalysts in 2024, it is hard not to be more bullish: continuous inflows into BTC ETFs, approval of spot ETH ETFs, Bitcoin halving, Federal Reserve rate cuts, and the U.S. election year.

There is no doubt that we are currently in the early stages of a bull market cycle, with funds still primarily flowing into Bitcoin, and next, we will see funds flowing into Ethereum, followed by altcoins.

Therefore, now is definitely the time to double down and prepare for the inevitable altcoin season.

Whatever you do, do not sell your altcoin portfolio now; most people just need to hold on and stay calm until we reach the peak of the bull market------you just need to take profits during the expected crazy fluctuations and rises.