Bitcoin Sparks Altcoin Season Cycle Amid Market Speculation and Ethereum Rebound
On July 25, Bloomberg highlighted that for experienced crypto traders, the Altcoin season represents a familiar market cycle. Initially, Bitcoin experiences a price surge, attracting substantial capital inflows and drawing attention to the broader digital asset space. As Bitcoin dominance strengthens, interest in altcoins diminishes temporarily. Subsequently, investors pursue higher yields by reallocating funds into underperforming altcoins, generating significant returns. This cyclical rotation earned the term “Altcoin season” during the 2017-2018 bull market, reflecting strategic capital shifts within the crypto ecosystem.
During the recent “Crypto Week” on July 14, Bitcoin’s new all-time high and subsequent consolidation phase sparked renewed optimism. Key market participants pointed to Ethereum’s breakout and the revival of the previously dormant Non-Fungible Token (NFT) market as indicators of a potential shift. However, this movement appears fragmented rather than indicative of a broad-based altcoin rally. For instance, XRP experienced a notable 60% increase since early July but faced a sharp 11% correction midweek, underscoring market volatility.
Many leading altcoins fall under the category of low liquidity, high fully diluted valuation (FDV) tokens. These assets often exhibit inflated FDVs reaching billions of dollars, while only a limited supply is actively tradable. This imbalance increases susceptibility to price manipulation, particularly in the latter stages of an altcoin cycle. As speculative fervor peaks and market exhaustion sets in, price reversals become more frequent. Despite widespread recognition of these patterns among traders, cautious optimism continues to influence market behavior.