While Bitcoin [BTC] is currently striving to maintain its position near the $100k mark, altcoins are experiencing an upward trend. This trend is typically observed in bull markets, where the movement of BTC and altcoins is inversely related, reflecting capital rotation within the cryptocurrency market.
According to the altcoin season index, the altcoin season has been ongoing for almost two weeks, with the index currently standing at 71. Although the index has slightly decreased, it does not indicate the end of the cycle or suggest a selling opportunity – on the contrary.
Timeline of the Altcoin Season and its Driving Forces
Stablecoins play a crucial role in the cryptocurrency ecosystem by offering stability amid market volatility, enhancing liquidity, and supporting DeFi activities. An increase in stablecoin inflows to exchanges indicates positivity and a rise in purchasing power.
For example, the reserves of Tether [USDT] on exchanges have surged notably over the past three months, reflecting the potential for heightened altcoin activity. The emission of stablecoins and their movement from reserves to centralized exchanges contribute to liquidity, transaction facilitation, and serve as a catalyst for significant investors.
Comparing with the 2020-21 period, the expansion of Tether reserves coincided with a vibrant altcoin season. The surge in reserves witnessed in February 2021 resembles patterns seen prior to previous altcoin seasons, hinting that a substantial altcoin season may be on the horizon, possibly in Q2 and Q4 of 2025, akin to past trends.
2025 Market Capitalization Projections
Following its peak in 2018, the altcoin market cap (excluding Ethereum [ETH]) extended beyond the 223.6% mark to $1.12 trillion in 2021. Analyzing the eventful 2021 cycle, projections indicate a 2025 target of $3.47 trillion at the 223.6% extension level, signifying potential growth in the market cap.
If historical patterns repeat, the altcoin market cap could meet these targets within the next ten months. Notably, with the conclusion of the U.S. tax season in April, any selling pressure related to taxes might diminish, paving the way for renewed buying interest and a potential price surge during the early summer months.
While the adage “Sell in May and go away” holds some relevance in the crypto market, the seasonality of returns can vary. Investors are encouraged to consider selling a portion of their assets in May and November based on historical trends, while remaining vigilant of long-term price movements.