Analysis of the Deep Reasons Behind the Delay of Alt Season

In recent months, crypto asset traders have been eagerly anticipating the arrival of the "alt season", hoping to see significant price increases in altcoins. However, despite numerous optimistic predictions and brief surges, the alt season has still not arrived as expected.

With Bitcoin continuing to dominate the market, altcoin enthusiasts can't help but ask: Why has the alt season been delayed? Will it come?

The Dominance of Bitcoin and Institutional Favor

Bitcoin is expected to account for about 60% of the total market capitalization of the cryptocurrency market between 2024 and 2025, reaching its highest level since the bull market of 2017. This dominance reflects the market's preference for Bitcoin, primarily stemming from its stability and widespread adoption by institutions.

The Bitcoin ETFs approved at the end of 2023 and the beginning of 2024 attracted a large influx of funds, making it a "safe-haven asset" in the crypto market. Large institutions prioritize Bitcoin while ignoring altcoins. Additionally, the Bitcoin halving event in 2024 reinforced its scarcity narrative, attracting funds that might have otherwise flowed into riskier altcoins.

As an analyst pointed out, "altcoins usually start to rise only after Bitcoin completes its parabolic rise." Since BTC is still continuously reaching new highs, investors have no motivation to turn to altcoins.

Macroeconomic Headwinds: Liquidity Tightening

Unlike the bull market of 2020-2021 (driven by near-zero interest rates and quantitative easing), the 2024-2025 period is characterized by quantitative tightening and high interest rates. This macroeconomic environment has a negative impact on the arrival of alt season.

Quantitative tightening has drained liquidity from the financial markets, reducing investors' risk appetite. As speculative assets, altcoins rely on excess capital, and without sufficient liquidity, they struggle to achieve growth.

Despite market rumors of a possible shift to an easing policy, a rate cut is still uncertain. Both institutional and retail investors are hesitant to take risks on altcoins before borrowing costs decrease. This stands in stark contrast to the previous liquidity boom during the alt season.

Altcoin Supply Excess: Insufficient Demand

The crypto market currently has over 15,000 altcoins, but the liquidity is not keeping up. New projects continue to emerge, leading to a dispersion of the total capital pool and diluting potential returns.

More tokens compete for the same liquidity, making it difficult for even potentially promising projects to gain attention. At the same time, venture capital for crypto projects has declined from $29.4 billion in 2022 to $7.1 billion in 2024, leading to a severe shortage of funding for altcoins.

This oversupply has created a "crowded market" where only tokens with outstanding practicality or viral popularity can stand out, which is far from the ICO boom of 2017 or the NFT frenzy of 2021.

Retail investor participation declines

Altcoin season is usually driven by retail investors' FOMO (fear of missing out) mentality. However, retail participation in 2025 is significantly weaker compared to past cycles.

Metrics tracking crypto-related social media activity indicate a lack of the frenzy seen for certain popular coins in 2021. Retail investors, who were hurt during the market crash in 2022, now prefer Bitcoin over altcoins.

Without the enthusiasm of retail investors, altcoins lack the momentum for sustained growth.

The Impact of Regulatory Uncertainty

Regulatory clarity is crucial for altcoins, especially those that may be classified as securities. Although certain political stances have ignited optimism, progress remains slow.

ETFs for various altcoins remain trapped in regulatory dilemmas. Analysts believe they have a high likelihood of approval, but the specific timeline remains unclear. Meanwhile, the regulatory ambiguity surrounding decentralized finance (DeFi) protocols and stablecoins has stifled innovation, causing institutional funds to hesitate.

Uncertainty will persist until regulatory agencies approve altcoin ETFs or clarify the rules.

Historical Cyclicality and Patience in Waiting

The crypto market is cyclical, and altcoin season usually occurs in the last year of Bitcoin's four-year cycle. While 2025 is considered the next alt season, latency is not without precedent.

The two alt seasons in 2017 and 2021 occurred after Bitcoin set a historical high and entered a consolidation phase. If BTC stabilizes above $100,000, capital may eventually flow into altcoins.

Ethereum's poor performance compared to Bitcoin also indicates that the alt season has not yet started. Historically, Ethereum usually leads altcoins to rise, but its ratio to BTC is still close to multi-year lows.

Conclusion

Alt season has not disappeared; it is just waiting for the right conditions. Bitcoin's dominance, macroeconomic pressures, and regulatory hurdles have temporarily suppressed the frenzy of altcoins. However, history shows that once BTC enters a stable period and liquidity returns, altcoins will have their moment.

Currently, it is wise to invest patiently and selectively in projects with strong fundamentals. As the saying goes in the crypto circle: "Time in the market beats timing the market."

Investors should remain vigilant, act cautiously, and closely monitor changes in Bitcoin's dominance. The arrival of alt season is just a matter of time, not whether it will happen.