WOO X Research: BTC surges, will there be another alt season this time?

On November 13th, Bitcoin surged to $92,000, and the total market capitalization of Crypto Assets reached $3.2 trillion, both hitting record highs. This round was only a frenzy of Bitcoin and memes, with Altcoins completely failing to keep up with the rise.

The reasons for the poor performance of AltCoins are roughly as follows:

The market does not buy into the Token economic model with low MC and high FDV for new projects, but instead invests in meme coins.

There is no killer-level application in this round.

The following is the BTC market share BTC.D, which is currently as high as 61%, a new high in three and a half years. Will BTC.D continue to rise? Can the above-mentioned downturn be resolved in this cycle? Is there still a season for altcoins? Let’s take a look with WOO X Research.

Reference: Trading View

AltCoinpump logic

Currently, we are in the early stage of an interest rate cut cycle, which means that the United States is releasing more liquidity to the risk market, and the transmission route of funds is directional. From the very beginning, traditional real estate pumps, funds will spill over to the stock market, and when the stock market reaches a certain market capitalization, the excess funds will flow into mainstream encryption assets (BTC/ETH/SOL). When the mainstream encryption assets increase and meet the market capitalization standard, funds will flow into the altcoin market with a smaller market capitalization, thereby boosting the prices of altcoin varieties.

You can imagine that the above asset categories are like a series of basins, with water pouring down and filling each basin. When there is enough water, it naturally overflows into smaller basins below. This flow path of funds indicates that funds will follow the characteristics of market liquidity, flowing from assets with relatively low risk and large volume to assets with higher risk and smaller volume.

Therefore, the prerequisite for the rise of AltCoin is: BTC must rise first, until it stops rising, and funds are willing to move out of BTC to buy AltCoin.

Reference: @MustStopMurad

Current market cycle: the eve of altcoin outbreak

The following chart shows the total market capitalization changes (Total 3) of the encryption market excluding BTC and ETH since the beginning of this year, which also represents whether AltCoins can explode or not. It can be seen that from April to September this year, the overall AltCoin market cap showed a significant downward trend, falling from 750 billion US dollars to 550 billion US dollars. However, starting from September, the Market Cap can be seen on the chart to stop falling and rise from 550 billion US dollars to the range of 6000 to 6500 billion US dollars, breaking the downward trend and also indicating that we have passed the lowest period of AltCoin.

And the aforementioned BTC.D is currently close to 61%, which is a new high in this cycle and the past three and a half years. According to past experience, the start of the altcoin season will be initiated by BTC pumping and sucking the blood of altcoins, causing BTC.D to soar. When it rises to a certain level, BTC.D will fall back to the range of 50%~55%, and altcoins will rise to fill the gap. We are currently in the period of BTC.D soaring to its peak.

The current overall Cryptocurrency Market Cap is about $3.2 trillion. If BTC.D drops from 61% to 50% while keeping the total Market Cap unchanged, it is estimated that $320 billion of Liquidity will be injected into the AltCoin market, which also represents a 28% growth in Total 2 (excluding BTC Market Cap)!

(*Calculation formula: [3.2T*(61-50%)] / [3.2T*(1-61%)] = 28%

From the perspective of financing, looking ahead: focus on follow Decentralized Finance and applications

We just judged the current market position from various Market Cap data, while the future outlook needs to be based on the current financing situation. Financing represents the confidence in the encryption market for the next 6-12 months, and is also a leading indicator of the development of AltCoins in this cycle.

In the past three months, the financing amount has been around the infrastructure, completing a total of 870 million US dollars in financing. Infrastructure is the focus of the financing map of the crypto market. As blockchain is still in the early stage of development, investors are still very interested in taking the lead in building infrastructure. It is important to focus on the second and third tracks, namely Decentralized Finance and others (usually referring to DApps applications). The former has a total financing amount of 4.3 billion US dollars, while the latter is 3.1 billion US dollars, leaving other tracks far behind.

The essence of financing is to invest in early-stage potential projects. While everyone is criticizing the poor performance of altcoin prices, investment institutions are starting to lay out early-stage Decentralized Finance and application projects, expecting a new round of explosion in 2025.

Reference: Rootdata