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Investors rotate into altcoins along a risk curve, starting with large-cap assets and eventually migrating into riskier low-cap coins.
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CryptoQuant founder and CEO Ki Young Ju recently argued that altcoin season — a period of rapidly appreciating altcoin prices typically following a Bitcoin (BTC) bull market — will require new capital injections from retail traders to commence.
The quantitative analyst wrote that institutional money is already tied up within exchange-traded funds, and the institutional investors, who own crypto indirectly through investment vehicles, are unlikely to rotate gains from blue-chip assets like BTC or Ethereum (ETH) into altcoins. Ju wrote:
“For altcoins to reach a new all-time high market capitalization, they will require a significant influx of fresh capital to crypto exchanges. The altcoin market cap below its previous ATH indicates reduced fresh liquidity from new exchange users.”
“Altcoins should focus on developing independent strategies to attract new capital rather than relying on Bitcoin’s momentum,” the analyst concluded while clarifying that he is still “bullish” on altcoins.
Bitcoin market capitalization vs altcoin market capitalization. Source: Ki Young Ju
Related: Current Bitcoin price ceiling projected at $135K — Ki Young Ju
Reigniting retail fear of missing out
The CryptoQuant CEO wrote that reigniting retail fear of missing out (FOMO) is central to attracting fresh capital that will drive altcoin prices higher — particularly altcoins with a smaller market capitalization.
In October 2024, popular trader Willy Woo said that Altcoin seasons would weaken with each market cycle. The trader told his followers on social media:
“There will be echo fractals of mid-caps and low-caps pumping after BTC pumps as investors chase returns higher on the risk curve. This is a normal part of markets, and we see this in equities — it’s just alt seasons will be weaker each cycle on from the great 2017 alt bubble.”
Several indicators may signal that retail traders are already catching FOMO. Open interest in the Ethereum futures market reached a new high on November 27 — indicating heightened market interest and a potential bull run for the smart contract asset that could spill over into other cryptocurrencies.
Retail investors also purchased approximately $100 million in MicroStrategy shares during the past seven days. The stock has become a favorite among traders — particularly retail traders who view MicroStrategy as a leveraged Bitcoin bet.
Magazine: Bitcoin dominance will fall in 2025: Benjamin Cowen, X Hall of Flame
This article first appeared at Cointelegraph.com News
