New Bitcoin Era and Mini Altcoin Season

Source: Talking Li, Talking Outside

In the previous article (March 12), we briefly discussed some future trends in the crypto market. Different people may have different thoughts or opinions, and no one can truly predict the future of the market. However, one thing is certain: while market cycles have certain regularities, the market is also constantly evolving.

In fact, looking back at some of our previous articles (for example, those from 2022 and 2023), some viewpoints that we considered reasonable or correct at the time may not seem entirely applicable today.

In this cycle, we have witnessed too many changes or new incredibilities, such as:

1) The MemeCoin Season seems to have replaced the previous Altcoin Season.

2) Bitcoin reached the milestone of $100,000 and has repeatedly broken historical highs, yet the king of altcoins, ETH, has not even surpassed its historical high in this bull market, and the current price of ETH is surprisingly the same as it was four years ago.

3) The number of projects (tokens) has increased exponentially.

For example, in March 2021, there were a total of 350,000 tokens in the crypto market, while by March 2022, there were 4 million tokens, and by March 2025, the total number of tokens is expected to exceed 40 million. If this pace continues, it is estimated that by 2026, the number of tokens in the market could exceed 100 million. As shown in the figure below.

4) In 2024, BTC ETFs were finally officially approved, ETH ETFs were also approved, and currently, more ETFs for DOGE, XRP, LTC, SOL, ADA, and others are under application review (however, the SEC has now delayed the approval of these altcoin ETFs, and considering the overall performance of the current market, the probability of approval in the second half of this year may be higher).

5) In 2025, the U.S. will include Bitcoin in its strategic reserve plan (executive order).

6) Institutions are actively accumulating Bitcoin and some altcoins.

Although in the previous cycle, large institutions like Grayscale already existed in the market, and we also experienced the entry of institutions like Tesla, with Musk continuously promoting it, since the beginning of this cycle, the participation of major institutions has been relatively deeper and broader, such as well-known institutions like MicroStrategy and BlackRock.

Of course, besides Bitcoin, some other altcoins have also begun to attract the attention and layout of some institutions. For example, WLFI (World Liberty Financial, a DeFi project supported by the Trump family), which has gained significant attention this year, has been continuously buying ETH, ONDO, MOVE, ENA, LINK, AAVE, and other tokens (it cannot be ruled out that some tokens are accepted as sponsorships). As shown in the figure below.

In short, we seem to be following the existing historical cycle patterns while continuously witnessing some new differences or new histories.

From an investment perspective, in this cycle, some old investors who insist on their inherent investment thinking seem to have suffered losses, especially those who focus all their investment on altcoin value investment strategies. A few days ago, I saw a representative report stating that a certain whale built a position in PENDLE eight months ago, but by this month, it seems they could no longer hold on and may have already cut losses and liquidated. As shown in the figure below.

Of course, compared to this old brother’s decisiveness, many old investors may still insist on holding onto their altcoins that have already fallen over 80%, putting themselves in a dilemma, such as being unwilling to cut losses directly or feeling unable to recover their investments by switching to Bitcoin… In fact, anyone facing such an outcome finds it difficult to make a choice or let go. As for what to do, we have already provided some thoughts and suggestions from both long-term and short-term perspectives in our article on March 11. Interested partners can refer back to that article, and I won’t elaborate further here.

Here, let’s set aside macro factors and focus on the crypto market itself. From the current overall market environment, it seems that people’s (including institutions) attention to Bitcoin (those who have been hurt or not hurt in this cycle seem to have basically turned to long-term attention to Bitcoin) will make it difficult for Bitcoin to experience a dramatic “upward” trend again. Sometimes, excessive attention can create certain pressures, and this accumulation of “pressure” may make it difficult for Bitcoin’s dominance to decline (or even continue to rise), prompting more people to turn to Bitcoin (more and more people are beginning to believe that investing in Bitcoin is better than investing in other altcoins). When Bitcoin experiences a pullback, more and more people will actively buy in…

With the new changes and new models in the market as described above, it seems we can no longer see the traditional concept of altcoin season (i.e., after Bitcoin reaches a certain historical high, its dominance begins to decline, leading to a scene where altcoins soar together). Since the beginning of this cycle, what we call altcoin season seems to have been replaced by the rapid rise and fall of phase-based MemeCoin Season, Trump Season, AI Season, etc. (or we can call it mini altcoin seasons).

So, can we still see that traditional “altcoins soaring together” season? I believe that this comprehensive altcoin season is already very difficult; you can’t expect 10 million tokens to collectively rise several times or even dozens of times at the same time!

Unless there is a fundamental change in liquidity, that is, a massive influx of new liquidity into the crypto market to support all altcoins to surge together.

However, mini altcoin seasons will still appear; it’s just a matter of time. If you are still interested in altcoins and do not want to spend too much time and energy on project research or participating in PvP games, then focus on digging out those projects with strong fundamentals, such as projects that can continuously generate profits, have good token economics, and can continue to build and have development visions… The simplest way is to directly select from the top 100 by market capitalization.

It can be anticipated that in the coming period, liquidity will still be mainly concentrated in BTC and a few altcoins, while most altcoins may face insufficient or continuously decreasing liquidity. The massive number of altcoins (along with numerous VC projects continuously unlocking tokens) will further disperse liquidity, and this fundamental issue can only be addressed by patiently waiting for internal innovations (i.e., innovations within the crypto market, but currently I do not see any) and some changes in macro factors (such as the expected interest rate cuts in June this year, new policies in the U.S. regarding the crypto industry, etc.) to alleviate the liquidity issues in the crypto market to some extent.

I often remember someone saying: History does not repeat itself, but it often rhymes.

We need to understand this statement reasonably. The so-called rhyme does not mean that we can just carve a boat to seek a sword. Just as we mentioned at the beginning of this article, while market cycles have certain regularities, the market is also constantly evolving. Some scenarios from previous cycles may no longer be entirely applicable today. We need to keep pace with the times and continuously adapt and study the new scenarios of the current cycle.

At this stage, opinions are quite divided. Some believe the market has completely entered a bear phase, some think it is just a technical correction (with the biggest bull market still ahead), and others believe the bull market has just begun. As for my personal view, I have already shared it in previous articles. I believe there may still be some new opportunities this year (but not widespread opportunities), but I cannot see anything too far in the future. For now, let’s look at the possible situations in May and June this year.

Moreover, everyone has different definitions of bull and bear markets. Some believe that as long as it falls below MA200, it is a bear market, while others think that Bitcoin must drop below $50,000 to be considered a bear market… As we mentioned in previous articles, it might be better to simply forget about bull or bear markets. We should focus on identifying a few important phases (such as accumulation — rising — falling — despair — rising — falling — despair — re-accumulation) instead. It is not that bear markets will always lead to losses, and bull markets will guarantee profits. In fact, whether in a so-called bull or bear market, as long as the market exists and liquidity remains, opportunities are there. We need to both follow the trend and go against it.

That’s all for today. The images/data referenced in the text have been supplemented in the Talking Li, Talking Outside Notion. The above content is merely personal perspectives and analyses for learning and communication purposes and does not constitute any investment advice.