Altseason cancelled: Why investors might be disappointed again

Altseason: The End of the Capital Rotation Myth?

It’s a scenario etched in the mind of every crypto investor: Bitcoin begins a rally, its dominance climbs, then profits are redistributed toward smaller caps, triggering an explosive Altseason. Yet, this well-oiled mechanism seems to be breaking down.

In a recent analysis that caused quite a stir on X, expert Ted Pillows challenges this market dogma. He argues that expectations of altcoin outperformance based on previous cycles are potentially misguided. According to him, current liquidity, concentrated on Bitcoin and traditional safe haven assets, shows no signs of sector rotation toward higher-risk assets.

This bearish perspective for altcoins is based on a simple observation: institutional money, via ETFs, remains confined to the king of cryptos. Retail investors, the historical driving force behind altseasons, are still missing in action to support a broad-based rally.

Bitcoin Absorbs Everything: Altcoins Left Behind?

The market is going through a phase where selectivity is brutal. While Bitcoin flirts with its peaks, the majority of altcoins struggle to keep up, or even correct sharply against the BTC pair. Ted Pillows emphasizes that betting on an automatic catch-up could be a costly mistake.

Unlike the cycles of 2017 or 2021, the correlation between Bitcoin’s health and that of altcoins is crumbling. We’re witnessing a flight to quality where BTC acts as a safe haven, while utility or speculative tokens suffer from a glaring lack of volume. If this trend continues, we could witness a slow capitulation of alt holders, tired of waiting for a breakout that never comes.

If Pillows’ analysis proves correct, the classic diversification strategy (holding a basket of altcoins while waiting for their explosion) could prove obsolete for this cycle. Investors must now ask themselves the crucial question: is the risk/reward ratio of altcoins still justified in the face of Bitcoin’s overwhelming dominance?

However, the market crypto remains unpredictable. A favorable macroeconomic announcement or a major technological innovation could be enough to reverse the trend and contradict the charts. The question remains whether investors’ nerves will hold out until then.

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