The list of cryptocurrency reserves in the United States has led to a rise in some altcoins. Will we still see an altcoin season in 2025? Will the four-year cycle of bull market patterns be broken?
Source: Talking about Li and Talking about the Outside
A few days ago, many people were still arguing that Bitcoin would drop to $80,000, but it seems that in the past couple of days, everyone has started to turn bullish again, calling for Bitcoin to reach $150,000 or even $200,000. The change in sentiment among everyone is faster than a weather forecast.
In the previous article (January 16), we discussed the Onchain Economy ETF and reviewed some recent favorable directions and factors for the market. Less than a day later, Trump started "promoting" again, and today there are rumors that he is open to creating a U.S.-first cryptocurrency reserve, prioritizing tokens like USDC, SOL, and XRP. As shown in the image below.
Subsequently, related tokens began to surge, and some KOLs quickly seized the opportunity, launching various versions of the "U.S. Cryptocurrency Reserve Candidate List" on social media (mainly listing cryptocurrencies established in the U.S.).
However, some people have raised different opinions about this news. For example, Quinn Thompson (founder of the hedge fund Lekker Capital) stated that the idea of the U.S. purchasing altcoins as strategic reserves is absurd and will never happen. As shown in the image below.
The reason why everyone is so enthusiastic about such rumors may be akin to the saying that Chen Sheng never said: The world has long suffered from altcoin seasons.
1. Will we still see an altcoin season in 2025?
Regarding whether we will still see an altcoin season in 2025, this is a question that many people have been asking in the public account's backend recently. Many people probably have their positions in altcoins and feel a bit reluctant as they watch Bitcoin continue to rise.
In fact, if you have read previous articles on the topic of altcoin seasons from Talking about Li and Talking about the Outside, you should be very clear about our viewpoint. From our perspective, we still maintain our previous speculation: there is still a chance for altcoins to emerge in this bull market, and optimistically, it may happen in the first quarter of 2025.
In previous articles, we also shared that historically, true altcoin seasons generally occur after BTC.D begins to decline rapidly. For example, this was the case in both the 2017 and 2021 bull markets, as shown in the image below.
Interestingly, we can also see from the image above that in previous bull markets, BTC.D began to decline rapidly in the first quarter (around March). Based on the current trend of BTC.D, we are still in a phase of a high point range. If (note that this is hypothetical) history can repeat itself, we might see a new altcoin season opportunity around March.
In addition to some on-chain data indicators and sentiment indicators as references, the "U.S. Altcoin Reserve Plan" mentioned above is also a significant positive factor. It is not hard to imagine that if the U.S. really establishes a reserve plan for certain altcoins and provides some legal support in policy, the emotional impact on the overall altcoin prices would be substantial. Of course, the news about the U.S. altcoin reserve plan is currently just a rumor, and its authenticity is unknown. We will only know after patiently waiting for Trump's performance after taking office.
Moreover, as we mentioned earlier, there are still many unresolved issues regarding altcoins, such as the problem of a massive number of new projects diluting market liquidity (most altcoins will ultimately wait for zero), the high FDV and low circulation issue (which exerts continuous selling pressure on the market), etc. Therefore, even if we do see a new altcoin season opportunity, not all altcoins will have significant upward potential. If you still wish to take some risks with altcoins, we only suggest that you focus on and explore project tokens under popular narratives like AI, DeFi, RWA, etc.
At the same time, it is also important to pay attention to the dynamics related to funding, such as focusing on the activity level of ecosystems and which ecological sectors are seeing capital inflows. As shown in the image below.
In short, combining our articles from a couple of days ago and the current market sentiment, it seems that Trump's inauguration ceremony (January 20) may trigger a new round of market rebound in February.
2. Will the four-year cycle of bull markets be broken?
When we mentioned the BTC.D indicator above, we also discussed historical trends and provided some speculative conclusions. Many people say that history does not repeat itself, but it often rhymes.
So, with the development of ETFs, the increasing deep participation of institutions, and changes in the macro environment… will the four-year cycle of bull markets in the crypto market be broken?
Although seeking a sword by carving a boat is not a correct method, due to comprehensive factors such as human nature, the past crypto market has maintained a general pattern of a bull-bear cycle roughly every four years, and each cycle follows the same pattern: Great Bull Market → Bear Market → Accumulation Phase (low range) → Consolidation Phase (accompanied by various pullbacks, fluctuations, and washouts) → Great Bull Market, repeating this cycle. As shown in the image above, this is the price trend based on Bitcoin halving events, and it can be clearly seen that the specific periods between the last halving and the next halving almost respect the same pattern of price behavior.
Moreover, aside from Bitcoin, if you study carefully, you will find that altcoins also generally follow a certain cyclical pattern. For example, the rough process is:
A) BTC rises and reaches a high point in the range (or breaks through ATH)
B) Altcoins start to rise, and some small-scale sector rotation effects occur
C) BTC consolidates at a high point range, and with the growth of the Total3 indicator, mainstream altcoins (like ETH, SOL, BNB, XRP, etc.) begin to lead the rise.
D) As the Fear & Greed Index rises, greed drives funds to continue chasing mid/small-cap altcoins, leading to a rapid decline in BTC.D, ushering in the so-called altcoin season.
E) The market undergoes a large-scale correction or crash, and then waits to restart.
Of course, the above is just a rough description of the process; the actual market situation may be more tumultuous and exciting, with a few making profits and most going to zero.
At least from the current situation, it seems that we are still within this established cyclical pattern. In other words, the four-year cycle pattern in the crypto market is still valid at present.
However, this does not rule out the possibility that this established pattern may be broken this year, ushering in a new "era." So, what could break the existing cyclical pattern?
We believe the most important logic here is: transformation.
What factors could lead to transformation?
What we have already seen includes: the continuous popularization of crypto ETFs, the ongoing participation of more large institutions (like BlackRock), and the government (mainly looking at the U.S.) starting to shift towards supporting Bitcoin.
What we may see next includes: Bitcoin being included in the national (U.S.) strategic reserves, etc.
Here we can simply compare the trends of NVIDIA and APPLE with Bitcoin, as shown in the image below.
Let's pay attention to the key points in the image above:
NVIDIA completed its transformation around 2015, which was also the phase when the AI concept began to accelerate. After researching some relevant materials, we found that after 2015, Google Research's landmark paper "Attention is All You Need" introduced a new neural network model for natural language understanding (Transformers). These models can generate higher-quality language models with less training time through "unsupervised models." As the scale of training data for these models continues to increase, the accuracy of the models improves. Coupled with AI scientists incorporating reinforcement learning models into neural network models to enhance the memory of robots, AI's understanding of text, music, painting, speech, images, and video has gradually surpassed the average human level. The later ChatGPT achieved a leap from quantitative change to qualitative change in this context.
As for APPLE's transformation, we can directly look at the time points in the image above. In 2000, Apple launched the iBook (Firewire), iMac (Summer 2000), Power Mac G4 (Gigabit Ethernet), and PowerBook (Firewire) series products. In 2007, the first-generation iPhone was released, marking the beginning of a new era in the development of human smartphones.
Now, comparing the current trend of Bitcoin, it seems to be once again stepping on the key point of a transformative era. Whether Bitcoin can successfully transform this time will depend on whether all the factors we mentioned above (retaining some unknown factors for the future) can push the wheels of history forward.
Therefore, we need to be mentally prepared for one thing: once this year (or next year, or perhaps later) Bitcoin undergoes the so-called transformation we mentioned above, it may break the existing four-year cycle pattern, and Bitcoin will enter a new super cycle. As Bitcoin enters a new super cycle, its dominant position will naturally continue to rise, entering a long bull cycle, and most altcoins will lose value. We may no longer see the so-called altcoin seasons as in history. Of course, this does not mean that some altcoins have no opportunities, as the potential approval of new altcoin ETFs (besides ETH) could still lift those altcoins with good backgrounds and fundamentals.
However, the so-called theories of transformation mentioned above are merely our speculation. You can still believe that Bitcoin is just a tulip scam, and you can still believe that the four-year bull market cycle in the crypto market will not change. But if you still believe that this round of crypto bull market is ongoing, then seize the potential altcoin season opportunities that may arise next. Perhaps the upcoming so-called altcoin season will become the last carnival moment for most altcoins.
In summary, whether or not this transformation occurs this year will not affect our witnessing the emergence of a new "era" in crypto. As shown in the image below.
