Why Has Alt Season Not Happened Yet?

Key Concepts

• Alt Season: A period where altcoins (alternative cryptocurrencies) outperform Bitcoin, characterized by a collapse in Bitcoin dominance and an increase in ALT/USD pairs.
• Bitcoin Dominance: The ratio of Bitcoin's market capitalization to the total cryptocurrency market capitalization.
• Satoshi (SATs): The smallest unit of Bitcoin (0.00000001 BTC). Denominating your portfolio in SATs helps track performance against Bitcoin.
• Quantitative Tightening (QT): A contractionary monetary policy where a central bank reduces the money supply, often by selling assets or raising interest rates.
• Quantitative Easing (QE): An expansionary monetary policy where a central bank increases the money supply, often by buying assets.
• All Bitcoin Pairs: The valuation of altcoins relative to Bitcoin (e.g., ETH/BTC).
• Social Risk: A metric composed of YouTube subscribers/views to crypto channels and Twitter followers to crypto analysts/exchanges/layer ones, used as a proxy for retail investor interest.
• Advanced Decline Index (ADI): An indicator that shows whether more cryptocurrencies are trending up or down, providing insight into the breadth of market participation.
• Zombie Bull Market: A market where only a few assets (primarily Bitcoin) are driving the overall market cap higher, while most other assets are underperforming.
• Oscillators: Viewing altcoins as assets that range between 25% and 100% of Bitcoin's market cap, rather than assets that consistently outperform or underperform.

Why Alt Season Has Been Elusive

The False Calls for Alt Season

• Many influencers have incorrectly predicted alt season in 2022, 2023, and 2024.
• Instead of alt season, Bitcoin dominance has continued to rise.
• True alt season is defined by a collapse in Bitcoin dominance and rising ALT/USD pairs, as seen in 2017 and 2021.

The Importance of Satoshi Valuation

• Focusing on increasing the number of SATs owned is crucial for success in the cryptoverse.
• Buying altcoins with Bitcoin instead of USD can maximize gains during potential alt seasons.
• If you are not in alt season, you are better off with Bitcoin and preserving the satoshi evaluation of your portfolio.

Debunking the "More Coins = Lower Bitcoin Dominance" Argument

• The creation of numerous new coins does not automatically lead to lower Bitcoin dominance.
• The same amount of money is spread thinner across more coins, reducing the impact on Bitcoin dominance.

The Significance of All Bitcoin Pairs

• The ETH/BTC chart (or its inverse, BTC/ETH) illustrates the relative valuation of Ethereum against Bitcoin.
• In 2021-2022, one Bitcoin could get you around 11 ETH; currently, it gets you around 36 ETH.
• Tracking all Bitcoin pairs helps understand potential market shifts and liquidity conditions.

The Role of Quantitative Tightening

• Tighter monetary policy (quantitative tightening) has historically led to altcoins losing value against Bitcoin.
• Last cycle, the Bitcoin/ETH valuation topped when the FED ended quantitative tightening.
• This cycle, the FED has continued quantitative tightening, causing ETH and other altcoins to underperform Bitcoin.
• The basket of altcoins (TOTAL3 - USD divided by Bitcoin) has put in new lows, suggesting further downside potential.

The Consumer's Role and the Extended Timeline

• The consumer has held on longer this cycle than last cycle, delaying the end of quantitative tightening.
• It took 87 weeks for all Bitcoin pairs to reach range lows from the peak last cycle; this cycle, it has taken 178 weeks.
• This extended timeline is why this bull market feels different from 2020-2021.

The Social Risk Metric

• Social risk is a composite metric of YouTube subscribers/views and Twitter followers, indicating retail investor interest.
• Alt season requires a durable increase in social risk, with higher highs and sustained levels above 0.4.
• Current social risk levels are not comparable to the 2017 and 2021 alt seasons.
• A longer rally by Bitcoin is needed to bring retail investors back into the altcoin market.
• Views to crypto YouTube channels are significantly lower than in 2021, indicating less euphoria.

The Advanced Decline Index (ADI) and the "Zombie Bull Market"

• The ADI shows whether more assets are trending up or down.
• A divergence between total market cap (going up) and the ADI (going down) indicates that only a few cryptocurrencies (primarily Bitcoin) are driving the market higher.
• This cycle feels different because most altcoins have not hit new all-time highs, unlike in the previous cycle.
• The ADI did not bottom last cycle until after quantitative tightening ended.
• The current market is described as a "zombie bull market" where altcoins only go up when Bitcoin goes up, and they collapse when Bitcoin drops.

The Dilemma of All Bitcoin Pairs and the FED Pivot

• The most likely outcome is for all Bitcoin pairs to go to the range low, especially until quantitative tightening ends.
• To get the alt season that people want, the altcoin market has to go where those people don't want it to go.
• As long as all Bitcoin pairs hold the current trend line, there is no compelling reason for them to go back up.
• The FED is unlikely to pivot until it feels the pain of a market downturn.
• Individual altcoins that don't go back to the range low may have muted returns in the bull market.

Altcoins as Oscillators

• Altcoins can be viewed as oscillators that range between 25% and 100% of Bitcoin's market cap.
• They bottom out when the altcoin market cap reaches 25% of Bitcoin's market cap and top out when they reach parity with Bitcoin.
• There is a chance they go below 0.25, but until they go to 0.25, the chances of a real alt season are slim.
• If altcoins require Bitcoin to go up first, it may be better to just hold Bitcoin.

The Importance of Retail and Bitcoin Dominance

• To make Bitcoin dominance go down, you need to see retail come back.
• When social risk is low, Bitcoin dominance goes up; when social risk goes up, Bitcoin dominance crashes.
• Retail investors often buy altcoins, leading to a temporary decrease in Bitcoin dominance.

The Altcoin Season Index

• The altcoin season index confirms that there has not been a sustained period of altcoin outperformance since 2021.
• The closest to alt season was in December 2024, but it was only for a few days.
• The only time that looked remotely like All Season was actually still during a bare market.

The Counterargument: Stablecoin Considerations

• If you don't subtract out stablecoins, all Bitcoin pairs are higher and closer to the level they broke down from in 2019, potentially signaling a Fed pivot.
• Including USDC in the calculation of total 3 minus stablecoins divided by Bitcoin shows that the range low is 0.25, and the market has already gone down to 0.3, requiring only a 16% drop to reach the range low.

Conclusion

• Alt season has not occurred because quantitative tightening never ended, and the economy held up.
• To get what people want, all Bitcoin pairs have to go where people don't want them to go.
• The narrative of preserving the Satoshi valuation of your portfolio has been based on quantitative tightening and the idea that altcoins are oscillators at best.
• Markets change, and it's important to separate what you want to happen from what you think will happen.
• Last cycle, eth Bitcoin bottomed when quantitative tightening ended.