Is “Bitcoin Season” real or a maximalist theory?

With Bitcoin (BTC) remaining above the critical $60,000 psychological threshold for two straight weeks, the growing chorus seems to reflect the sentiment that the market may be in the midst of another “bitcoin season”. It mainly refers to the period of time when money from various altcoins flows back into the leading cryptocurrencies, until interest rates finally start to dry up and capital flows back into the various altcoins.

To assess whether such a concept actually exists and deserves attention, Kadan Stadelman, chief technology officer of Komodo, an open-source technology provider was approached. According to him, the Bitcoin season phenomenon is very real and seems to be quite encouraging market psychology, adding:

"For new institutional money going into space, Bitcoin seems like a 'safe bet' as it leads in market cap. It is considered less risky, but there is also a lower probability of high returns as it takes a lot of big whales buying to affect prices in both directions. Stadelman goes on to say that the overall outlook for retail investors is very different, as most of these people are typically looking for altcoins that can generate 10 or 100x returns, even if the offering is much riskier in the long run. “When Altos reaches a certain price level, profits will inevitably be attributed to less stable cryptocurrencies like Bitcoin or Stable Coins,” he added.

Ross Middleton, chief financial officer of decentralized cryptocurrency trading platform DeversiFi, believes that when Bitcoin starts to rise, it usually “sucks” oxygen out of smaller tokens, causing most traders to return to Bitcoin. As soon as bitcoin started leveling up, traders started turning themselves back into altcoins until the cash flow became so large that they effectively stole a larger token offering. “Bitcoin usually drops sharply as over-leveraged traders are liquidated. “Then the whole cycle starts all over again, with Bitcoin gradually moving back,” Middleton said.

Wes Levitt, strategy manager at Theta Labs – the company behind the blockchain-powered video streaming network Theta – provides a somewhat unique take on the matter, saying that the Bitcoin season theory is valid and is seen as a primitive form of traditional sector rotation. observed on the stock exchange can: “This is an encouraging sign that we are seeing more detailed cycles across various crypto sectors - e.g. between DeFi [decentralized funding], first-tier protocols, exchange tokens, etc - because that means the capital flowing into cryptocurrencies is getting more and more sophisticated.”

Catherine Deng, vice president of cryptocurrency exchange MEXC Global, said that she supports a similar view – ie. Money first ends up in Bitcoin every bull cycle, and then moves into other territories, including Altcoins, Irreplaceable Tokens (NFT), GameFi, DeFi, and even Stablecoins. “The movement of this flow is innovation, or you could say micro-innovation in this bull market like COMP introducing liquidity or AXS entering the gambling market to make money,” she said.

Despite a significant period when Bitcoin's dominance increased and altcoins weakened, Nick Merten, CEO of crypto trading platform Digifox and creator of the cryptocentric YouTube channel DataDash, said that he personally ignored the story.

 He explains his position and points out:

• "In recent cycles, as in this one, altcoins have generally been ahead of Bitcoin. Given the huge market and the fact that there are always exciting new opportunities in the altcoin market, it is difficult to justify while the bull market is largely Bitcoin's opinion that "Bitcoin season" "will not continue."
• He also claims that the market doesn't have to see a true alto season just yet, even if altcoin dominance increases in 2021 or maintains the general level of support fairly well. "I believe that altcoin dominance will continue to grow through this 75% cycle - that is, between the maturation of DeFi and the emerging first-tier protocols," he said.

A Binance spokesperson, who wished to remain anonymous, shares the same view. They said that there is not enough evidence to confirm the history of Bitcoin seasons, adding: “BTC accounts for more than 40% of the market so when it goes up it attracts a lot of attention and some capitals may choose to switch to it and vice versa. As cryptocurrency adoption accelerates worldwide, more funds and people are entering the market. As more and more people buy Bitcoin, the price will go up simply because of the limited supply.

Everyone has the best guess at when this ongoing Bitcoin bull run will end, according to Den, adding that technical indicators suggest that we may already be in the middle of the ongoing cycle. He also said that altcoins like Shiba Inu (SHIB) are doing well during this ongoing implementation, which shows that even in a market dominated by Bitcoin, there is always money that will continue to flow into other offerings. Dunn said:

“With the introduction of Bitcoin ETFs [Exchange Traded Funds], the increased involvement of many publicly traded companies and the expansion of the NFT art space, there is increased liquidity across the market. We may have smoother movement between coins than cycles between BTC and alto moving only forward. Levitt believes that just because some altcoins like Chainlink (LINK) and SHIB are doing well right now, the current Bitcoin cycle isn't going to end anytime soon.

“Trying to see the state of the crypto market by studying the SHIB is a bit like trying to predict the S&P 500 based on GME trading,” he joked. Stadelman also believes that it is difficult to judge when the Bitcoin cycle will end and when a new alternate season will take effect, especially since whenever BTC sees good performance, the entire market starts to rise with it. Admittedly, however, there have always been certain variants, many of which are usually caused by whale assemblages. Regarding this, he said:

"On September 23, it was announced that the 50 trillion SHIB donated to Crypto Covid Relief India was selling for USDC [USD Coin]. This eased the fear of selling the market at the same level. The big one followed on September 30 Purchase of 6 trillion SHIB (now worth more than $270 million), meaning that not every cryptocurrency follows the historical “bitcoin season” and “altcoin season”.

There is no denying that the crypto market has boomed in recent years, which, according to the aforementioned Binance spokesperson, has spawned new stories besides the Bitcoin season theory. For example, they believe that in addition to the money flowing in and out of Bitcoin into other altcoins, the DeFi and NFT markets now also function as domains in their own right.

Finally, they emphasize that due to the fact that the number of altcoins is growing every day, it is difficult to predict where the market will go in the near future. “Like other asset classes, today's various crypto sectors are uniquely based on a variety of factors. It's hard to comment on altcoins because there are a lot of altcoins out there and we can't always predict where they will go."