Altseason stifled by lack of fresh inflows into sector — analyst

The total altcoin market capitalization is still below the all-time high recorded in November 2021, with capital circulating between projects and capital inflows remaining stagnant.

Market analyst Ki Young Ju, the CEO of CryptoQuant, compared the current altcoin market cap to the market cap of Bitcoin (BTC), which has doubled since 2021, and said: "Only a few altcoin projects with strong use cases and narratives will survive."

According to Total3 — the total market capitalization of all cryptocurrencies excluding Bitcoin and Ether (ETH) — altcoins currently have a market cap of roughly $943 billion.

The altcoin sector briefly touched the all-time high of $1.1 trillion in market capitalization during the historic rally in November through December 2024. However, the market cap quickly retraced to current levels.

BTC market cap vs altcoin market cap. Source: Ki Young Ju

Related: Altcoin ‘euphoria’ phase begins once market cap jumps 16% — Trader

Altcoin season is different this time

The CryptoQuant CEO previously warned that this market cycle would deviate from previous cycles and said that altseason is no longer triggered by investors rotating capital gains from Bitcoin into altcoins.

Instead, this altseason will likely be dependent on stablecoin liquidity and a rise in the number of stablecoin trading pairs, Ju added.

According to Ju, a rise in stablecoin trading pairs suggests that fresh capital is entering the altcoin market and reflects true demand increase, as opposed to capital rotations from other digital asset classes into altcoins.

The altseason index shows a bias toward Bitcoin season as opposed to alts. Source: CoinMarketCap

Capital flows into Bitcoin and Ether exchange-traded funds (ETFs) also represent a fundamental shift from previous cycles because the capital flows are siloed within the ETF ecosystem and away from onchain crypto markets.

This means investors holding the ETFs will have a harder time shifting funds from Bitcoin or Ether investment vehicles into smaller-cap altcoins, the CryptoQuant analyst said.

In December 2024, Felix Hartmann, founder of venture capital firm Hartmann Capital, predicted that most altcoins would experience a "slow bleed" until late January 2025.

The venture capitalist argued that there was not much alpha in establishing altcoin positions until the market picked up following a consolidation phase.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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