Alt-Season Is Back: All You Need to Know

In the thrilling world of cryptocurrencies, "alt-season" signals the exhilarating moments when alternative cryptocurrencies steal the spotlight from Bitcoin. These cycles typically follow Bitcoin’s meteoric rallies, with investors shifting their gaze to promising assets offering potentially explosive returns.

With the end of 2024 nearing, all indicators point toward the next alt-season. From institutional interest to advancements in blockchain and improvements in real-world applications of altcoins, the stage is set for new opportunities. This might just be what smart investors have been waiting for: a chance to catch the next big wave in crypto history.

A Look Back at Previous Alt-Seasons

Understanding past alt-seasons provides valuable insights into the dynamics that drive these market phenomena. By examining the alt-seasons of 2017-2018 and 2021, we can identify patterns and factors that may influence future cycles.

The alt-season of late 2017 to early 2018 was characterized by a lot of Initial Coin Offerings where several projects were coming up with their tokens for capital raise. Within this period, Bitcoin's dominance in the cryptocurrency market fell drastically from around 86.3 percent at the end of 2017 to its low of 38.69 percent at the beginning of 2018. This decline in Bitcoin market dominance was accompanied by a significant rise in the total market capitalization of altcoins, growing from an estimated $30 billion in the early parts of 2017 to over $600 billion by January 2018.

BTC Dominance, Weekly

During this period, many altcoins showed exponential growth. Ethereum grew from about $8 in January 2017 to over $1,400 by January 2018, where the functionality of its smart contract capabilities and widespread usage in ICOs were among the major triggers. 

ETHUSD, Weekly

Ripple grew from $0.006 in January 2017 to over $3 by January 2018, mainly due to a number of partnerships with financial institutions and banks, adding to the focus on cross-border payments. Litecoin increased from $4 in January 2017 to nearly $350 in December 2017, as investors viewed it as the “silver” compared to Bitcoin’s “gold”.

The potential of blockchain technology and promise of high returns for new projects fueled investor enthusiasm. In turn, this led to over-saturation of the market with many ICOs that were not based on any viable product or clear use case. Due to building regulatory pressure, this market hugely corrected in early 2018.

The year 2021 alt-season has been marked by rapid gains in decentralized finance platforms and NFTs. Bitcoin dominance also fell as investors diversified into altcoins offering innovative financial services and collectibles in the digital world. Total cryptocurrency market capitalization reached new highs, to which the contribution of altcoins has been significant. Solana was among the biggest gainers, rapidly growing from $1.60 in early 2021 to over $250 by November. Similarly, Avalanche and Polygon saw exponential growth as investors looked to alternative scalable Layer 1 and Layer 2 solutions. Projects with on-chain utility, such as Uniswap and Aave, outperformed speculative projects, and this speaks to how market maturity affects the nature of alt-seasons.

These historical alt-seasons outline some very important lessons. First, technological advancements and new use cases are integral in altcoin adoption and value appreciation. Investor enthusiasm leads to wild price surges, yet markets are vulnerable to corrections when those projects fail to deliver promises. Increasing scrutiny affects market dynamics, underpinning the need for compliance and transparency.

Current Cycle

At the end of November 2024, the cryptocurrency market started showing signs of the beginning of a new alt-season. There are several indications that may suggest the sudden change in investor focus from Bitcoin to other alternative cryptocurrencies.

It also means that Bitcoin's market dominance has shrunk from around 55 percent in early November to around 50 percent mid-month. Several major exchanges reported a spike in altcoin trading volumes, with the likes of Binance and Coinbase seeing significant increases in the number of altcoin transactions. This development saw several altcoins significantly appreciate in market capitalization, with projects like Solana reaching new all-time highs.

BTC Dominance, Weekly

The macroeconomic landscape in 2024 is much more conducive than in previous years. With an average global inflation rate of 3.2% and central banks turning dovish, risk-on assets such as cryptocurrencies are gaining renewed interest. The Federal Reserve's rate cut of 50bps last month has provided fresh liquidity to global markets, which has been one of the key drivers of speculative assets. Regulatory clarity in major markets, such as the European Union's MiCA framework, has also helped reduce investor uncertainty.

The approval of Bitcoin ETFs has had an immense impact on the market. It facilitated a greater inflow of capital into the cryptocurrency market, by extension also increasing liquidity for altcoins. The entry of institutional investors through crypto ETFs has legitimized the market, spurring further exploration of altcoin opportunities.

Social media platforms such as X and Reddit have become a hub for altcoin discussions, with the #AltSeason2024 hashtag trending globally. Mid-cap altcoins' trading volumes have jumped 28% over the last fortnight, per data from CoinGecko. Altcoins with their use cases now tend to be increasingly highlighted by influencers and analysts, raising excitement and speculative interest.

Opportunities and Risks

This alt-season is likely to be dictated by emerging trends in blockchain technology and market demands. Layer 2 scaling solutions, such as Arbitrum (ARB) and Optimism (OP), seem to be gaining traction since Ethereum gas fees remain an issue. AI-driven tokens, such as Fetch.ai (FET), also seem to be coming into focus because they combine artificial intelligence with blockchain. Frontrunners of this cycle could include cross-chain functionalities such as Polkadot's DOT and Cosmos' ATOM because their technologies are tackling the interoperability issue.

Decentralized identity solutions also seem to be garnering interest, as many projects like Worldcoin and Civic (CVC) try to redefine how digital identities are securely and privately maintained. According to analysts, all this may define this all-season's "utility-driven" character, as opposed to the speculative booms of the past.

Web3 infrastructure remains a hotbed of innovation, for example decentralized storage solutions, such as Filecoin (FIL) and Arweave (AR), which are seeking to draw enterprises away from traditional cloud services. Meanwhile, the growth in DeFi 2.0 projects, which addresses some limitations of earlier DeFi protocols, signals a resurgence of interest in decentralized finance.

The integration of AI into the blockchain, as illustrated in projects like SingularityNET (AGIX), could create entirely new markets that mix data monetization with predictive analytics. These sectors showcase ever-improving blockchain capabilities, which could also lead to positive price action.

In an optimistic scenario, the combination of institutional inflows, technological advancements, and a supportive macroeconomic environment may propel altcoins to highs currently unimaginable. For example, if the Ethereum TVL in DeFi protocols were to double, it could lead to renewed interest in Layer 2 solutions, while further adoption of cross-chain technologies might create new revenue streams for developers and investors.

On the other hand, a bearish scenario could emanate from regulatory overreach, market manipulation, or some unexpected macroeconomic shocks, such as a resurgence of inflation. Historical alt-seasons have also exhibited the risk of speculative excess, where overvalued projects collapse and leave investors at a loss.

The difference between this cycle and the past alt-seasons lies in several distinctions. In 2021, this was purely a market driven by hype over DeFi and NFTs. Today, scalability, interoperability, and real-world applications are taking center stage. An example of such a shift is the rise of ZK-rollups in 2024, indicative of the market's demand for technological innovation instead of speculative ventures.

So What Are We Watching for 2024-2025?

Ethereum (ETH): Ethereum remains one of the cornerstones of the crypto ecosystem, particularly with its latest development into Proto-Danksharding, which better scales the blockchain and further reduces gas fees. In doing so, it also cements its position in DeFi and dApps, among other places. More so, integrations involving big financial institutions extend Ethereum's use cases to the real world.

In the Weekly timeframe, ETHUSD formed a descending channel pattern and the price broke the upper trend line. Given that bullish sentiment is building up and Bitcoin is updating ATH, Ethereum may start to rise. 

There is a possibility of consolidation above $3,400, which could be a buying opportunity for Ethereum. This could signal a potential rise in the price of ETH to the  $4,100 and $4,800 levels;

ETHUSD, Weekly

POL (ex-MATIC): Polygon has made significant strides in improving scalability issues with its Layer 2 solutions. Partnerships with mainstream companies for NFT initiatives further firmed it in the market. The implementation of zero-knowledge EVM technology also improved its transaction efficiency further.

POLUSD rebounded from the lower boundary of the descending channel, which makes the beginning of growth possible 

Should the price of POLUSD rises above 0.600, this could be a bullish signal for prices to rise to as high as 1.0300; should there be a trend breakdown, POLUSD may even surge as high as 3.000 at the start of the alt season.

Chainlink (LINK): Chainlink's oracle services are still the means for connecting smart contracts to real-world data. The recent launch of the Cross-Chain Interoperability Protocol has extended its utility across a variety of blockchain networks, further cementing the chain's role in the ecosystem.

Arbitrum (ARB): Arbitrum is a Layer 2 scaling solution for Ethereum that has favoured developers with its low-cost transactions and high throughput. The ecosystem has grown significantly, with many projects having migrated to the platform from Ethereum's mainnet to leverage its capability.

Fetch.ai (FET): Fetch.ai integrates artificial intelligence with blockchain. It provides a decentralized machine-learning solution. An example of its real-world applications includes predictive analytics on supply chain management.

But the biggest new trend is memecoins!

Dogecoin (DOGE): Initially created as a joke cryptocurrency but has grown to become one of the popular cryptocurrencies. DOGE's recent surge, partly influenced by Elon Musk's involvement in the political landscape, has propelled its market capitalization to new heights, higher than that of many large financial institutions.

Shiba Inu (SHIB): nicknamed the "Doge Killer", SHIB has established a strong community and even launched its decentralized exchange, ShibaSwap. The technological developments of this cryptocurrency have increased its efficiency regarding transactions and scalability with the recent release of the Shibarium network.

Pepe (PEPE): Pepe's popularity in internet memes has carried over into the meme coin space, and its significant market standing is due to its strong cultural appeal and community-driven initiatives.

Brett (BRETT): This is a new star within the memecoin universe. Brett struck the crypto world with its brilliant branding and fresh approach to rewards. Brett tokens become increasingly popular with their staking options and unique gamification elements. The ongoing social media campaigns nurtured a very strong and loyal community, and this makes it stand out in the memecoin market.

Yeti Ouro: The latest addition to the meme coin fray, Yeti Ouro has been gaining attention with its ongoing presale and development of the Yeti Go game. Built on Ethereum, it has gained quite substantial presale funding, an indication of very active interest from investors.

Conclusion: Is Now the Time to Bet on Altcoins?

The potential for a new altcoin season is clear, with a number of indicators showing a shift in market dynamics. It would appear that historical data, current market conditions, and future trends show the growth of the altcoin market.

While the profit opportunities are significant, investors must develop a clear strategy to effectively navigate the market. This strategy should focus on projects with strong fundamentals, avoid impulsive decisions driven by hype, and stay informed of macroeconomic developments. And, of course, you need to stay on trend and keep your finger on the pulse.

Always do your own research before investing in any projects and never invest more than you can afford to lose as cryptocurrencies are volatile.