Crypto expert Benjamin Cowen shares his thoughts on why the altcoin season has not yet begun in the current market cycles.
What is Altcoin Season?
Altcoin season is a period when altcoins (cryptocurrencies other than Bitcoin) significantly outperform Bitcoin in both USD terms and relative to Bitcoin itself. This usually occurs after a notable drop in Bitcoin's dominance in the market.
Comparison of 2017, 2021, and Current Market Cycles
Cowen used a key chart to track this, comparing the total altcoin market (excluding Bitcoin and stablecoins) to Bitcoin’s market cap. In both the 2017 and 2021 alt seasons, this chart dropped to 0.25 before altcoins began to rally. Currently, it is around 0.31, indicating that altcoins are still too high compared to Bitcoin.
The Role of the Federal Reserve in Altcoin Season
According to Cowen, in past cycles, rate cuts by the Federal Reserve and the end of quantitative tightening played a significant role in kickstarting alt season. However, fewer cuts have been made this time around, leading to tighter monetary conditions that are not conducive to altcoin growth.
Given the current economic conditions and Bitcoin's dominance, the expert suggests that a shift in the market, including a drop in altcoins’ values relative to Bitcoin and more intervention from the Federal Reserve, is needed before the arrival of alt season.
