Is there still alt season for cryptocurrency?

Yes, I believe that altcoins are bound to appear. But when they appear should be directly related to liquidity. But the emergence of altcoin season is often accompanied by an increase in liquidity. From the figure, we can see that if ETH is the largest altcoin, the matching degree with US liquidity is very high, but when liquidity increases, it will first be transmitted to large-scale assets, such as S&P 500, and then to medium-sized assets, such as $Bitcoin, and finally to altcoin assets, such as $ETH.

Therefore, we can also see that when liquidity is missing, large-scale assets are least affected, while small and medium-sized assets will be more affected. That is, ETH is the second largest cryptocurrency after BTC, so the data shows that it can be closer. If it is changed to other altcoins, the changes affected by liquidity will be more intense.

That is to say, when liquidity is at its peak, the rise will be more fierce, and when liquidity is at its lowest, the fall will be very sharp. Therefore, at a time when liquidity has not increased significantly, the possibility of altcoin season is indeed lower. In fact, altcoins are like the Russell 2000 in the US stock market.

As can be seen from the figure, the Russell 2000 is seriously affected by liquidity. Even if there is a trend of breaking through the rising liquidity in a short period of time, it is very easy to fall sharply. In fact, this is very different from the main assets with "external forces". For example, the Ai industry in the US stock market is in the limelight, so a large amount of funds flow in, and when the liquidity is poor, it will naturally "drain blood" from small-cap stocks.

The same is true for cryptocurrency, the only difference is that the emergence of spot ETFs has stimulated on- and off-exchange liquidity to buy BTC, but because the overall liquidity has not improved, it is equivalent to drawing blood from other assets.

From the comparison chart, we can see that the trends on both sides are very similar. Both are affected by the liquidity in the United States. Especially when liquidity is insufficient, the rise may be good, but once there is a decline, non-high-quality assets are the first to be cleared and the last to be bought at the bottom. Therefore, the S&P 500 and BTC often fall the least and rise the fastest in market fluctuations.

In the end, the copycat season will indeed occur, but the copycat season will inevitably be accompanied by a rebound in liquidity. From now on, the rebound in liquidity means that, on the one hand, monetary policy needs to continue to move towards easing and enhance investors' risk appetite. On the other hand, there will be direct liquidity stimulation to increase funds in the market, such as stopping balance sheet reduction, canceling SLR or QE.

Therefore, if there is no injection of liquidity, the situation of altcoins will at most be a short-term surge and plunge, and it will be difficult to sustain for a longer period of time and form an altcoin season.