Why Has Alt Season Not Happened Yet?

Benjamin Cowen

Introduction to Altseason

Altseason refers to a period in the market cycle where altcoins outperform Bitcoin, leading to a significant increase in their value. However, despite numerous predictions, altseason has been elusive in the current market cycle.

Defining Altseason

Altseason is characterized by the collapse of Bitcoin dominance and the rise of alt-USDT pairs. Historical examples of altseason can be seen in 2017 and 2021, where Bitcoin dominance dropped, and altcoins experienced significant gains.

Reasons for the Elusiveness of Altseason

Several factors contribute to the lack of altseason:

  1. Quantitative Tightening: The continuation of quantitative tightening by the Federal Reserve has led to a tightening of monetary policy, making it less favorable for altcoins to rally.
  2. Bitcoin Dominance: Bitcoin dominance has continued to increase, indicating that investors prefer Bitcoin over altcoins.
  3. Lack of Retail Participation: The social risk metric, which tracks retail participation, has not shown a durable increase, indicating that retail investors have not yet returned to the market.

The Role of Quantitative Tightening

Quantitative tightening has played a significant role in the lack of altseason. The Fed's decision to continue quantitative tightening has led to a decrease in liquidity, making it harder for altcoins to rally.

The Importance of Denominating in Satoshis

Denominating portfolios in Satoshis (sats) rather than US dollars can help investors make more informed decisions. This approach allows investors to focus on the relative value of Bitcoin rather than its absolute value in US dollars.

The Need for a Fed Pivot

A pivot by the Fed from quantitative tightening to quantitative easing is likely necessary to trigger altseason. However, this pivot may not occur until the economy shows signs of weakness, and the Fed feels compelled to intervene.

Conclusion

In conclusion, altseason has been elusive due to the continuation of quantitative tightening, the lack of retail participation, and the increasing dominance of Bitcoin. Until these conditions change, it is unlikely that altseason will occur. Investors should remain objective and focus on the fundamentals of the market rather than getting caught up in hype and speculation.