Is “Bitcoin Season” Real Or A Maximalist Theory? – The Great Plateau

As Bitcoin (BTC) continues to hover above the all-important psychological threshold of $ 60,000 for two weeks in a row, a growing chorus of voices seems to echo the feeling that the market may be in the middle of another “season.” Bitcoin ”.

It basically refers to a window of time in which money returns from various altcoins in the flagship cryptocurrency until finally the interest starts to run out and the capital starts to flow back to different altcoins.

To assess whether such a notion actually exists and is worth investigating, Cointelegraph reached out to Kadan Stadelmann, CTO of Komodo, an open source technology provider. In his opinion, the phenomenon of the bitcoin season is very real and seems to be weighing heavily on the psychology of the market, adding:

“For the new institutional currency entering the space, Bitcoin appears to be a ‘safe bet’ as it is the leader in market capitalization. It is considered less risky, but it is also less likely to generate high returns, as it takes many large purchases of whales to affect the price in either direction. “

Stadelmann went on to say that for retail investors their overall outlook is quite different as most of these folks are generally looking to find altcoins that can deliver 10x or 100x returns, although the proposition is much riskier in the long run. “It is inevitable that when the alts reach a certain price, those gains will flow back to less volatile cryptocurrencies like Bitcoin or stablecoins,” he added.

A dive into the history of the “Bitcoin season”

Ross Middleton, CFO at decentralized cryptocurrency trading platform DeversiFi, believes that every time Bitcoin starts to rise, it “sucks the oxygen” out of the smaller tokens, causing most traders to turn to Bitcoin.

Subsequently, once Bitcoin starts to stabilize, traders start turning back to altcoins until the flow of funds becomes so great that they effectively steal larger token offerings. “So Bitcoin generally declines dramatically as over-indebted traders liquidate. Then the whole cycle starts over again with Bitcoin gradually climbing back up, “Middleton said.

Wes Levitt, chief strategy officer at Theta Labs, the company behind the blockchain-powered video streaming network Theta, told Cointelegraph that Bitcoin’s season theory is valid and can be seen as a primitive form of industry rotation. . that we traditionally observe in the stock market:

“It is an encouraging sign that we are seeing even more granular cycles in different areas of crypto, that is, between DeFi [decentralized finance], layer one protocols, exchange tokens, etc., as this implies that the capital invested in crypto becomes more and more sophisticated.

Katherine Deng, vice president of cryptocurrency exchange MEXC Global, told Cointelegraph that she shares a similar opinion, that is, money enters Bitcoin first each time. Bullish cycle to then start moving to other territories, including altcoins, non-fungible tokens (NFT). ), GameFi, DeFi, and even stablecoins. “The driving force behind these flows is innovation, or we could say micro-innovation in this bull market like COMP introducing cash extraction or AXS entering the gaming market to win,” he said.

Not everyone is convinced

While there are significant periods when Bitcoin’s dominance is on the rise and altcoins are losing ground, Nick Merten, CEO of cryptocurrency trading platform Digifox and creator of the crypto-focused YouTube channel Data Dashboard, has told him to Cointelegraph that he personally ignored these accounts. In elaborating his position, he underlined:

“In the last cycle, as well as this one, altcoins have generally outperformed Bitcoin. Given the large-scale markets and the fact that there will always be new and exciting opportunities in the altcoin market, it is difficult to justify staying primarily in Bitcoin during bull markets. I am of the opinion that the ‘Bitcoin season’ is not going to last.

Furthermore, he argued that the market has not even experienced a true alt season yet, although throughout 2021 the dominance of altcoins grew or held its general support levels quite well. “My belief is that the dominance of altcoins will continue to grow up to 75% during this cycle, that is, between the maturation of DeFi and the emerging layer one protocols,” he said.

A spokesperson for Binance shares a similar opinion, wishing to remain anonymous. They told Cointelegraph that there was not enough evidence available to support Bitcoin’s one-season account, adding:

“BTC represents more than 40% of the market and therefore when it goes up it gets a lot of attention and some of the capital can choose to invest in it and vice versa. As crypto adoption accelerates globally, more funds and more people are entering the market. When more people buy Bitcoin, the price will increase simply due to its limited supply. ”

When will the current Bitcoin cycle end?

In Deng’s view, this is the best estimate of when this Bitcoin bull run will end, adding that technical indicators seem to suggest that we may already be in the middle of an ongoing cycle. Furthermore, he claimed that altcoins like Shiba Inu (SHIB) are performing well during this current run, showing that even in a market dominated by Bitcoin, there is still money that will continue to flow into the market for other offerings. Deng said:

With the launch of the Bitcoin ETF [exchange-traded funds], the increased participation of many state-owned companies, as well as the expansion of the NFT art space, there is an improvement in liquidity throughout the market. We can have more refined movements between currencies, rather than a single cycle between BTC and alts just to move forward.

Levitt believes that just because some altcoins like Chainlink (LINK) and SHIB are doing well right now does not mean that the current Bitcoin cycle will end anytime soon, adding that as long as institutional money and adoption continue to grow. ” increase. , the current trend will continue.

“Trying to discern the state of the crypto market by studying SHIB is a bit like trying to predict the S&P 500 based on how GME operates,” he joked.

Stadelmann also believes that it is difficult to determine when a Bitcoin cycle will end and when a new alt season begins, especially since every time BTC starts to perform well, the entire market begins to follow a pattern, an upward trend. With that said, he admitted that there are still some outliers, many of which are generally due to whale buildup. He said about it:

“It was announced on September 23 that 50 trillion SHIB donated to Crypto Covid Relief in India had been sold for USDC. [USD Coin]. This reduced fears of a market sell-off on a similar scale. This was followed by a major purchase of SHIB 6 billion (now worth more than $ 270 million) on September 30. This means that not all cryptocurrencies follow the “Bitcoin season” and “altcoin season” narrative.

The future is still unpredictable

There is no denying that the cryptocurrency market has matured a lot in recent years, which, according to the aforementioned Binance spokesperson, has spawned new narratives outside of Bitcoin’s season theory. For example, they believe that in addition to the money flowing in and out of Bitcoin to other altcoins, the DeFi marketplace and NFTs have also started to function as separate domains today.

Finally, they pointed out that due to the fact that the number of altcoins continues to grow with each passing day, it is difficult to predict where the market will go in the short and medium term.

“Like other investment classes, different sectors of crypto now operate uniquely based on a myriad of factors. It’s difficult to comment on altcoins as there are so many altcoins out there and we can’t always predict where they will go.

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