Conversation with multiple traders: How far are we from a full alt season?

Author: kkk, Rhythm

On August 12, Ethereum broke through $4,700, reaching a new high in four years. @CryptoHayes, who took profits early last week, also bought back Ethereum on August 9. Bitcoin also reached a new high, and the total market capitalization of cryptocurrencies surged to $4.2 trillion, completely igniting market sentiment.

Traditional markets are also thriving. The S&P 500 and Nasdaq 100 in the US stock market have both hit historical records, with global liquidity accelerating towards risk assets; the US Dollar Index (DXY) has fallen below 98, further opening the floodgates for capital to flow into the stock and cryptocurrency markets. Such a macro environment not only reinforces the upward trend but also boosts investors' confidence in high-risk assets.

At the same time, the market is almost certain that the Federal Reserve will lower interest rates at the meeting on September 17, with a probability close to 100%, and will reduce the benchmark rate to a range of 4.00%-4.25%. This expectation provides additional fuel for a market reliant on high liquidity—especially cryptocurrencies. Nowadays, the wealth effect of altcoin season has become a hot topic in the market, and the key lies in when it will fully start.

Next, Rhythm BlockBeats has compiled traders' views on the upcoming market situation to provide some directional reference for everyone's trading this week.

@b66ny

BTC.D has shown a significant downward trend recently, having fallen from its previous high to about 57.7%. Combined with the trend of ETH.D, I believe this is a typical signal of capital rotation: market funds are beginning to withdraw from relatively stable assets in favor of higher risk and higher potential return targets. Historically, a continued decline in BTC.D has often been one of the necessary conditions for the initiation of altcoin season.

ETH.D not only represents the strength of Ethereum itself, but is often seen as the leader of the entire altcoin market. Currently, ETH.D is performing strongly, with a dominance rate rising to 14.0%, and alongside a rapid increase in ETH prices, ETH/BTC has risen over 4% in the past 24 hours, indicating a clear trend of funds flowing from Bitcoin to Ethereum.

This trend is a classic script of capital rotation: In the first phase, BTC stagnates or even declines, and funds begin to flow into ETH; the rise of ETH not only boosts market confidence but also creates conditions for more liquidity to be injected into the altcoin market.

What is worth noting next is OTHERS.D (the market capitalization proportion of small and medium-sized altcoins excluding major cryptocurrencies like BTC and ETH). Currently, OTHERS.D is still in a prolonged bottom consolidation and has not shown explosive growth similar to ETH.D, indicating that capital remains concentrated on a few major assets like ETH. Although SOL has also seen a noticeable increase today, the signs of capital rotation are becoming clearer, but it has not yet fully spread to the high-risk, small-cap speculative sector.

Looking at the three main indicators, the market is likely in the early stages of rotation:

Happened: BTC.D downtrend, capital overflow.

Happening now: ETH.D is rising, with funds concentrating flowing into ETH.

Not yet occurred: OTHERS.D rises, funds spread to small-cap altcoins.

@im_BrokeDoomer

Looking at the comparison of the market capitalization of altcoins to Bitcoin from 2017 to the present, we are currently at a critical support level at the lower end of the channel. This level has historically been a sensitive zone for capital entry, often accompanied by a warming of market sentiment and accelerated rotation. If this support is confirmed, the altcoin sector is likely to experience a collective explosion, marking the official start of a new round of altcoin season.

The startup process of altcoin season is generally as follows: Bitcoin (BTC) starts the market trend → Ethereum (ETH) follows with an increase → BTC gains momentum again → ETH breaks its all-time high (ATH) → Large-cap altcoins rise → BTC sets a new high → ETH and large-cap altcoins reach new highs together → Mid-cap altcoins take off → Small-cap altcoins experience a full-blown explosion.

We are currently in the third phase, where ETH and large-cap altcoins are reaching new highs, and we can expect an explosion from other altcoins in the future.

@ZssBecker

During the last bull market in 2020, the narratives of most altcoins did not explode at the beginning, but rather fully launched after the price of ETH broke its historical high and increased by 3 times. At that time, funds flooded into new narratives—such as the gaming sector—pushing related tokens to skyrocket by 10, 20, or even 50 times, with Sandbox soaring by as much as 80 times; even the most hollow and marginal gaming projects could achieve gains of several times. This phenomenon only truly occurred in the later stages of the bull market, but once it started, it became a concentrated explosion of wealth effect.

I believe that this scene will be replayed in this round of the market. Currently, we are still in the first phase of the altcoin season - the dominance period of BTC and ETH. We need to wait for ETH to break above $5000 and for mainstream altcoins to achieve a 2-3 times increase before market funds will frantically look for the next narrative. The most likely candidates to take over will be AI, RWA, and gaming, as these three areas have been effectively penetrated and made profitable by the crypto industry in reality, possessing strong narratives and high potential returns.

The launch of the narrative in the previous round of games allowed countless people to turn several thousand dollars in capital into millions of dollars in assets; this time, the market's capital scale is even larger and the risk appetite higher. Once it starts, the driving force of capital will only become stronger. For investors, the key is not to anxiously chase after it now, but to patiently wait and lay out their strategies in advance. When the signal for the narrative switch appears, the climax of the altcoin season will truly arrive.

@lanhubiji

Understanding market structure will lead to the realization that an altcoin season is inevitable, but the form it takes may be completely different from the past two rounds. In the past, the number of altcoins was limited, and capital was relatively concentrated, resulting in a nearly uniform increase across all leading sectors; however, there are now over a million cryptocurrencies on the market, leading to extreme competition and making it impossible for capital to cover all assets.

This means that in this round of market trends, it is more likely to see a "local altcoin season" — funds will concentrate on a few segments or individual tokens with strong narratives, strong communities, and strong liquidity, creating local frenzies, while the majority of coins will still be ignored by the market. For investors, opportunities still exist, but the probability of selecting the right targets is much lower than in the past, and currently, there is more optimism towards the AI sector.

@joao_wedson

The real altcoin season has not yet begun. The flow of smart money typically follows this path: first from BTC to ETH, then into the top-tier coins, and finally spreading to mid and small-cap tokens. The current market has just entered the first half, and the true "altcoin frenzy" is still on its way, possibly lasting all the way to November. In other words, the rise we are seeing now is just the "appetizer," and the real "main course" has yet to be served.