CryptoAmsterdam, compiled by TechFlow, analyzed the concept of “copycat season” in the cryptocurrency market and its supposed dependence on quantitative easing (QE). However, a closer examination of historical charts reveals that neither statement is accurate.
The key to understanding altcoin seasons lies in analyzing the capital flow from Bitcoin to other cryptocurrencies. The process typically begins with an influx of funds into Bitcoin and major altcoins, followed by an increase in value for these assets. As investors become greedy, they divert funds to other alts, triggering a rapid surge in their market values.
Historical data shows that altcoin seasons are not triggered by QE but rather by the start of a Bitcoin bull run or significant events such as the launch of a Bitcoin ETF. The sequence of capital flow is clear: Bitcoin → Major Alts → High Market Cap Tokens → Mid Market Cap Tokens → Low Market Cap Tokens.
The alt season is characterized by a decline in Bitcoin dominance, allowing funds to flow from Bitcoin to alts. This phenomenon often occurs after Bitcoin breaks through a new high for the second time and enters a consolidation phase. The emergence of altseason typically follows these conditions, not QE or other external factors.
While QE can boost the market, it is not a necessary condition for altcoin seasons. The growth of altcoins during periods of quantitative tightening (QT) demonstrates that QT is not the decisive factor in market performance. Instead, the key driver is the capital flow from Bitcoin and major alts to other cryptocurrencies.
Source: https://www.panewslab.com/en/articledetails/s7dxdvk2.html