Cryptocurrency operating guide

Bitcoin halving, all-time high, and altcoin season – a recipe for a bull run, or is it? First, halving the price of Bitcoin reduces its issuance rate, resulting in a scarcity of supply. BTC then rises to its ATHs and is followed by a crowd of altcoins pumping in led by investors who prefer higher, albeit riskier, returns. So the altcoin season is full. Bitcoin saw its last halving in May of this year, and shortly after that, it broke the $100,000 mark – a historic achievement. However, the altcoin market is bleeding. Where is the usual gathering? Is the golden recipe broken? The rise in institutional capital and the liquidity crunch caused by rising interest rates, coupled with Trump’s positive and aggressive stance on cryptocurrencies, has made one thing certain: this cycle will be unlike any we’ve seen before.

How is this course different?

Each cycle has four phases: accumulation, encoding, distribution, and reduction. Although the mechanism behind these stages is well known, timing the market is one of the most sought-after skills. You try to predict when we will enter a certain phase to strategize your trades. However, although cycles follow a predictable pattern, we must not forget the broader market context – and cryptocurrencies have seen a lot in the past year.

Institutional capital

The increasing presence of institutional investors in the Bitcoin market has reshaped its dynamics. After occupying the seventh place as the world’s largest asset, Bitcoin has become a new asset of choice for institutions, supported by the emergence and growth of cryptocurrency ETFs. Their increased participation often leads to greater price stability. However, for altcoins, this may not be good news. After all, significant volatility and corrections redirect capital flow to altcoins. Less volatility means less returns that can be made back into the altcoin market.

This year has been special. The launch of spot Bitcoin ETFs has brought a significant influx of capital from traditional finance into the cryptocurrency market. Institutional inflows into these ETFs caused a shock to the supply of Bitcoin, strengthening its dominance. The demand for Bitcoin generated by ETFs directly impacts Bitcoin dominance, which currently stands at around 56%, a useful metric often overlooked by novice traders. It measures BTC’s market share compared to altcoins, and provides insights into whether we are in Bitcoin season (BTC outperforms) or altcoin season (altcoins outperform). What does strong BTC dominance with a stable Bitcoin price mean? Dumping alternative currencies. In this cycle, Bitcoin ETFs have prolonged Bitcoin’s dominance. This new variable was absent in previous bull runs and will undoubtedly make the 2025 altcoin season unique.

Macros: Liquidity and Regulations

If you ask any finance executive what the most important financial metric is, they’ll tell you it’s liquidity. In 2023 and 2024, US interest rates rose to one of the highest numbers in a long time. Although it has fallen from 5.25% a year ago to 4.19% now, it is still a relatively attractive return for a risk-free asset. On the other hand, lowering interest rates often causes cryptocurrency prices to rise for a very simple reason – it creates a favorable environment for riskier assets to flourish. After all, risk-free government debt with a 0.11% yield, as it stands in 2021, is as attractive as a capital loss due to inflation. Lower rates equal cheaper borrowing and increased liquidity, which in turn prompts investors to hold on to their money for higher returns. where? Yes, you guessed it. encryption.

There is no doubt that the Trump administration’s victory in the United States has shaken the world of cryptocurrencies. The Bitcoin law has sparked lively debate across crypto and non-cryptocurrency circles. If passed, the Senate legislation would require the Treasury Department and the Federal Reserve to purchase 200,000 bitcoins annually over a five-year period to accumulate 1 million bitcoins. In other words – about 5% of global supply. It goes without saying that pro-crypto regulations are a very meaningful step for the widespread adoption of crypto assets, and Trump’s stance has proven to ignite positive sentiment, with BTC reaching ATH shortly after the future president confirmed his plans to create a cryptocurrency. BTC Federal Reserve.

With BTC maintaining its dominance, high interest rates, and pro-crypto regulations in the US, should we expect a full-blown altcoin supercycle in 2025? That’s a billion dollar question.

“Where are you going?”

If history has taught us anything, it is that altcoin pumps often follow major Bitcoin movements. However, estimating how large these price movements will be – or exactly how long after altcoins reach all-time highs – is impossible. David Seamer, CEO Digital asset wave“I don’t think we will see an altcoin season as dramatic as 2021 in the near future, meaning Bitcoin dominance drops below 40%,” he says. “But we will see a significant increase in altcoin values ​​as Bitcoin continues to rise.” Simmer then adds that “for altcoins to break out like 2021 did for Bitcoin, the use (adoption) and value (revenue generation) of altcoins would have to increase by several orders of magnitude,” stressing that this could happen within at least 3 years. But once it starts, altcoin season itself can be easily recognized due to some quite bullish signs:

• Rapid price growth as altcoins outperform Bitcoin, especially large-cap altcoins. There are multiple narratives driving this growth, and they are not limited to single trends.
• Altcoin dominance is on the rise as during the May 2021 altcoin season. These coins have gained significant ground in the market, with the combined market cap of the top 100 altcoins being 1.3 times that of Bitcoin.
• FOMO-driven sentiment, high trading volumes, and risk-on investors are fueling buying pressure, as well as price momentum.

Cane Island Digital Research participated in “Evidence of Altison“Finds about the seasonality of altcoin rallies, showing ETH as an altcoin alternative to experience a bull market. Additionally, it mentions a repeating pattern of the Altson period from January to May.

Narrative superiority

Although the upcoming altcoin season may differ significantly from what we are used to, some sectors have secured their positions in the crypto space. After the $VIRTUAL token saw a pump of 24908.4% (i.e. 249x), it is safe to say that we have entered a new level of narrative dominance. While meme currencies can outperform sectors like real-world assets or artificial intelligence, Artificial intelligence agents They are in a league of their own, and are often seen as the driving force behind the next supercycle.

AI is still at the top of its game, and as AI agents advance, the on-chain AI economy has gained a significant portion of mindshare, peaking at 50% in 2024, according to Kaito AI. This trend is likely to follow in 2025, driven by unprecedented demand for AI services.

Institutional adoption, sparked by big names like BlackRock, has also impacted sectors like real-world assets, legitimizing tokenization as a staple of the cryptocurrency world. While most of the attention is on AI and AI agents, traditional finance is exploring tokenization as a viable business option, as major banks like JP Morgan and Goldman Sachs attempt to disrupt the financial market.

How to prepare for altcoin season?

As we enter the year 2025, we must keep several things in mind before we enter the year 2025. Altcoin season. First, Bitcoin dominance is your friend, so use it wisely to time your trades. Websites like BlockchainCenter.net can help you assess whether we are in altcoin or Bitcoin season. What is important to keep in mind is:

• Cryptocurrencies are largely sentiment-based, so look for regulatory moves, macroeconomic trends, or native crypto narratives (DeFi, AI proxies, meme coins).
• Not all altcoins will follow BTC price dynamics. Historically, projects with strong fundamentals or those aligned with emerging narratives, such as AI projects, have performed better. But stick to quality over quantity and focus on projects with strong fundamentals, active teams, and, ideally, product-market fit that excites a large community.
• Corrections are healthy. It signals consolidation and allows investors to enter into positions before the next phase higher. Altcoin seasons often occur in the final stages of a bull run. Be patient.

Altcoin season 2025

The cryptocurrency market is maturing. Each session is a starting point and should be viewed as a learning lesson. While memes are still reaping their rewards, new narratives are becoming more influential. But here’s the most interesting part: the narratives that are popular now, like AI agents, aren’t just passing trends. Furthermore, we are now facing a greater impact from macros and institutional adoption than any previous bull run. Does this mean we should expect different dynamics for altcoins this time? to some extent. We should not blindly follow the pattern of previous years either. The question is not whether or not altcoin season will happen, but rather when and how different it will be from previous years. Fasten your seat belt.