There is enough historical data to suggest that the “bitcoin season” really does exist.

With Bitcoin remaining above the key psychological threshold of USD 60,000 for the past two weeks, a daily refrain seems to repeat itself that the market may be in the middle of yet another “Bitcoin season”.

Bitcoin price chart | Source: Tradingview

Basically, this refers to the time it takes for money to flow back from various altcoins to Bitcoin, until interest rates finally dry up and capital flows back into altcoins.

So does the concept of “Bitcoin season” really exist and is it worth paying attention to? According to Kadan Stadelmann, Chief Technology Officer of Komodo, an open source technology provider, the Bitcoin season phenomenon is very real and appears to be weighing on market sentiment.

“For the inflows of institutional investors new to this space, Bitcoin seems like a safe bet as it leads the way in terms of market cap. It is considered less risky, but also has less chance of high returns, as massive buying pressure from whales is required to influence the price in both directions. “

Stadelmann went on to say that retail investor views are generally different, as they are mostly looking for altcoins that can generate 10 or 100 times the return, even if there are many more risks in the long run.

“It is inevitable that when altcoins reach a certain price, profits will flow back into less volatile cryptocurrencies like bitcoin or stablecoins.”

Immerse yourself in the history of the “Bitcoin season”

Ross Middleton, chief financial officer (CFO) of the deversiFi decentralized exchange, believes that when bitcoin rises in value, it usually “sucks” from the smaller tokens, causing most traders to return to bitcoin.

Then when Bitcoin stalled, traders turned back to some altcoins until the drain became so large that it dwarfed the larger tokens.

“Bitcoin often crashes when overly leveraged traders are liquidated. Then the whole cycle starts all over again, with Bitcoin gradually rising again, ”added Middleton.

Wes Levitt, Head of Strategy at Theta Labs, the company behind the blockchain-based video streaming network Theta, offers a slightly unconventional perspective on the subject, saying that the Bitcoin season theory is valid and possible for the stock market.

“It is an encouraging sign, we are seeing specific cycles with overlaps between different crypto areas such as DeFi, Layer 1 protocol, exchange coins … as this means that capital investments in cryptocurrencies are becoming more and more complex.”

Katherine Deng, Vice President of the MEXC Global Exchange, has a similar view. Money first flows into Bitcoin every bull cycle and then starts moving to other territories including Altcoins, NFTs, GameFi, DeFi, and even Stablecoins.

“The driving force for these flows is innovation, or we can say micro-innovation in this bull market, like the introduction of liquidity mining by COMP or the entry of AXS into the play-to-market – earn (P2E)”.

Not everyone is convinced

While there are key phases in which Bitcoin’s dominance increases and altcoins lose ground, Nick Merten, CEO of the Digifox cryptocurrency exchange and owner of the crypto-focused YouTube channel DataDash, believes he is not personally doing this.

“In the previous cycle, as in this one, altcoins have often outperformed Bitcoin. Given that the markets are big and there will always be exciting new opportunities in the altcoin market, it’s hard to justify that bitcoin always makes waves in bull markets. I don’t think the ‘bitcoin season’ won’t last long. “

Nick Merten goes on to argue that the market hasn’t even had a real altcoin season, although 2021 either saw its growth or held up its general support pretty well.

“I am convinced that the altcoin dominance in this cycle, that is, between DeFi maturation and the emerging Layer 1 protocols, will continue to increase to 75%.”

A Binance spokesman had similar thoughts. He believes there isn’t enough evidence to back up the story of a Bitcoin season.

“Bitcoin has over 40% of the market and when it goes up it draws a lot of attention and some capital flows in and vice versa. As the adoption of cryptocurrencies increases around the world, more funds and more people will enter the market. As more and more people buy Bitcoin, the price will go up simply because of its fixed supply. “

When does Bitcoin’s current bull cycle end?

According to Katherine Deng, no one knows when the ongoing Bitcoin bull run will end, but technical indicators seem to suggest we are in the middle of a cycle. She added that altcoins like Shiba Inu (SHIB) are doing well right now, which shows that even in a market dominated by Bitcoin, there is always money that will continue to flow into services.

“With the introduction of the Bitcoin ETF (Exchange Traded Fund), increased participation by other public companies and the expansion of the NFT art space has improved liquidity across the market. We can have more subtle movements between coins rather than a single cycle between BTC and altcoins just moving forward. “

Levitt believes that just because some altcoins like Chainlink (LINK) and SHIB are doing well at the moment that the current Bitcoin cycle isn’t going to end anytime soon and adoption continues to grow, the ongoing trend will continue.

“Trying to know the state of the crypto market by studying the SHIB is like trying to predict the S&P 500 based on GME’s trading,” joked Levitt.

Stadelmann also believes that it is difficult to judge when a Bitcoin cycle ends and when a new Altcoin season begins, especially since whenever Bitcoin starts performing well, the entire market has started to go up. However, he acknowledged that there are always certain exceptions, many of which are often driven by a congregation of whales.

“On September 23, it was announced that 50 trillion SHIB donated to Crypto Covid Relief of India had been sold to USDC (USD Coin). This alleviates fears of a market sell-off of a similar size. This was followed by a massive SHIB 6 trillion purchase (currently valued at over $ 270 million) on Sept. 30, meaning any cryptocurrency doesn’t follow the narrative of “Bitcoin Season” and “Altcoin Season”.

The future is not easy to predict

There’s no denying that the crypto market has matured a lot in recent years, which, according to a Binance spokesman, has spawned newer stories beyond Bitcoin seasonal theory. For example, he believes that in addition to the money just flowing in and out of Bitcoin into other altcoins, the DeFi and NFT markets have also started to function independently at the moment.

Finally, he stressed that it was difficult to predict the short- and medium-term determination of the market as the number of altcoins was constantly increasing every day.

“Like other asset classes, various crypto sectors are now performing well due to a variety of factors. Altcoins are difficult to comment on as there are so many and it is not always possible to predict where they will go.

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