WOO X Research: BTC surges — will there still be an altseason this cycle?
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WOO X Research: BTC surges — will there still be an altseason this cycle?
BTC stands alone in strength, with market dominance at a new high not seen in three and a half years.
Navigating Web3 tides with focused insightsOn November 13, Bitcoin surged past $92,000, pushing the total cryptocurrency market capitalization to $3.2 trillion—both reaching record highs. This cycle has been a celebration solely for Bitcoin and meme coins, while altcoins have completely failed to keep up with the rally.
The underperformance of altcoins can be attributed to two main reasons:
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The market is rejecting new projects' token economic models characterized by low market cap (MC) but high fully diluted valuation (FDV), shifting investments instead toward meme coins
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No killer applications have emerged in this cycle
The chart below shows Bitcoin's dominance (BTC.D), currently at 61%, the highest level in three and a half years. Will BTC.D continue rising? Can the aforementioned issues be resolved within this cycle? Is there still hope for an altcoin season? Let’s explore these questions with WOO X Research.
Source: TradingView
Altcoin Rally Logic
We are currently in the early stage of an interest rate-cutting cycle, meaning the U.S. is releasing more liquidity into risk markets. The flow of capital follows a specific path: starting from traditional real estate appreciation, funds spill over into the stock market; once the stock market reaches a certain market cap, excess capital flows into major crypto assets (BTC/ETH/SOL). When these mainstream crypto assets achieve sufficient price gains and market cap milestones, capital then moves into smaller-cap altcoins, driving their prices upward.
You can visualize the above asset classes as water basins of varying sizes. When enough water is poured, it fills the larger basins first and eventually overflows into progressively smaller ones. This pattern of capital flow indicates that money naturally moves from lower-risk, larger-scale assets to higher-risk, smaller-scale ones, following market liquidity dynamics.
Therefore, the prerequisite for an altcoin rally is: Bitcoin must rise first, continue gaining until momentum slows, prompting capital to rotate out of Bitcoin and into altcoins.
Source: @MustStopMurad
Current Market Cycle: On the Eve of an Altcoin Breakout
The chart below illustrates the total market capitalization of the cryptocurrency market excluding Bitcoin and Ethereum (Total 3)—a key indicator of whether an altcoin breakout is imminent. From April to September this year, the overall altcoin market cap showed a significant downtrend, falling from $750 billion to $550 billion. However, starting in September, we see signs of stabilization and recovery, with market cap rebounding from $550 billion to the $600–650 billion range, breaking the previous downward trend. This suggests we have already passed through the darkest period for altcoins.
As previously mentioned, BTC.D has now approached 61%, marking both a cyclical peak and the highest level in three and a half years. Historically, the start of an altcoin season is typically preceded by a strong Bitcoin rally that drains liquidity from altcoins, causing BTC.D to spike. Once BTC.D reaches a certain high point, it begins to decline back to the 50%–55% range, allowing altcoins to catch up in value. We are currently at the peak of such a BTC.D surge.
The current total cryptocurrency market cap stands at approximately $3.2 trillion. Assuming constant total market cap, if BTC.D falls from 61% to 50%, about $320 billion in liquidity would flow into the altcoin market—implying a 28% growth for Total 2 (market cap excluding Bitcoin)!
(*Calculation formula: [3.2T*(61-50%)] / [3.2T*(1-61%)] = 28%)
Future Outlook from a Funding Perspective: Focus on DeFi and Applications
We’ve assessed the current market phase using various market cap metrics. For future outlook, however, we should examine recent funding trends. Funding reflects confidence in the crypto market over the next 6–12 months and serves as a leading indicator for altcoin developments in this cycle.
In the past three months, fundraising has largely centered on infrastructure projects, totaling $870 million in funding. Infrastructure remains a key focus area in the crypto funding landscape, as blockchain technology is still in its early stages, and investors remain keen on securing early positions in foundational projects. Of particular note are the second and third largest funded sectors: DeFi and "Other" (typically referring to application-layer DApps). The former raised $430 million, the latter $310 million—far outpacing other sectors.
Funding essentially means investing in early-stage, high-potential projects. While retail investors complain about poor altcoin price performance, institutional players are quietly building positions in early DeFi and application projects. A new wave of breakthroughs is expected in 2025.
Source: Rootdata
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