- Bitcoin’s dominance persists as institutional investors drive demand, delaying a potential altcoin season.
- Altcoins need fresh capital and independent strategies to compete as Bitcoin’s institutional trajectory reshapes the market.
The cryptocurrency market is going through a peculiar moment in which Bitcoin’s dominance endures, delaying the much-anticipated altcoin season (altseason).
Ki Young Ju, the founder and CEO of CryptoQuant, offered analysis of this phenomenon stressing changes in industry capital flow patterns. Unlike past cycles when retail traders predominated, institutional investors and spot ETFs significantly drive the current Bitcoin surge.
Why is altcoin season delayed?
Compared to the last cycle, the nature of capital flowing into #Bitcoin has shifted. The current Bitcoin rally is primarily driven by demand from institutional investors and spot ETFs.
Unlike crypto exchange users, institutional investors and ETF… pic.twitter.com/dpDBCF0BTo
— Ki Young Ju (@ki_young_ju) November 27, 2024
Institutional Influence and the Need for Altcoin Independence
Ki Young Ju claims that typically institutional investors and ETF buyers do not rotate their holdings from Bitcoin to altcoins. This is so because asset rotation is less practical given their activities mostly outside of crypto exchanges.
He further clarified that although big cryptocurrencies may attract institutional interest via ETFs or other investment platforms, small altcoins depend on crypto exchange users to generate their market activity. Currently below its all-time high, the altcoin market cap indicates the dearth of fresh liquidity coming from new exchange users.
Put another way, “For altcoins to reach a new all-time high market capitalization, they will require a significant influx of fresh capital to crypto exchanges.”
Ki Young Ju underlines that ETFs, institutions, and maybe even governments—not retail traders—are the main drivers of Bitcoin’s development, even if its retail FOMO could be encouraging exchange user activity. He also advised altcoin startups to concentrate on developing autonomous ways to draw fresh money instead of depending on the momentum of Bitcoin.
Ki Young Ju pointed out in a second tweet that it seems doubtful that Bitcoin’s dominance will change soon. While mid- and small caps gained just 10%, large-cap altcoins barely achieved a 16% increase over a period of 37% growth in the market cap of Bitcoin.
Mid and small caps last performed better than Bitcoin during the memecoin mania in April. This emphasizes how difficult altcoins find it to challenge Bitcoin’s hegemony without major changes in market sentiment or cash inflow.
On the other hand, CNF previously reported rising investor interest in altcoins resulting from artificial intelligence tokens and meme coins.
This suggests a possible altseason since it has reduced the dominance of BTC and ETH. Given altcoins are still 35% below their all-time highs, the current market change offers chances for significant altcoin sector expansion.
