HashKey Capital: The Dawn of Altcoin Season Approaches

Hong Kong-based digital asset group HashKey Capital The firm shared insights in its market report that delve into vital factors to monitor as we anticipate the rise of altcoins.

The analysis highlights that historically, when Bitcoin's market dominance escalates to between 62% and 70%, it often signals the beginning of an altcoin rally. altcoin season As Bitcoin starts gaining market dominance in a new cycle, capital usually channels towards altcoins when it begins to lose that dominance. This transition opens doors for altcoins, given that investors often seek out higher-risk assets that promise bigger returns.

Another significant driver of this trend is the relationship between Bitcoin's price increases and the performance of exchange-traded funds (ETFs). In scenarios where crypto-native funds spark the rally, funds tend to shift from Bitcoin to altcoins. However, when ETFs take the lead, the likelihood of capital moving into altcoins decreases, as traditional investors may not have direct access to these assets. In such instances, investments are more apt to flow towards other crypto-related equities that operate in a distinct domain.

Investor risk tolerance plays a pivotal role here. To catalyze an altcoin surge, two main risk attitudes need to be recognized. Primarily, profit potential is a major concern for investors, and since cryptocurrency sectors have seen marginal profit, there's a rising dependence on Bitcoin. Moreover, altcoins have lagged behind, with fewer standout projects making headlines.

For altcoins to regain traction, Bitcoin would need to experience further price growth. Current Bitcoin levels fall short of counterbalancing losses encountered by altcoins. Industry experts suggest that Bitcoin's price must eclipse the $80,000 threshold for altcoins to find their momentum again.

Emerging sectors like Ethereum (ETH), Solana (SOL), Real World Assets (RWA), AI innovations, and Decentralized Physical Infrastructure Networks (DePIN) must display robust performance as well. Recent quantitative easing actions in the US and China have somewhat bolstered investor risk appetite; however, this still presents the greatest hurdle in the existing market environment.

HashKey Capital Stresses the Investment Logic Behind Altcoins

From HashKey Capital’s perspective, Ethereum's sluggish performance can be traced back to several influences, including intensified competition within the blockchain space, reduced transaction costs, and the rise of Layer 2 solutions that draw value away from Ethereum's fundamental network. It is expected that Ethereum's performance will remain flat until it transitions into a deflationary phase.

HashKey Capital also views Solana Solana stands out as a pivotal contender in this market. It functions independently of Miner Extractable Value (MEV) or Layer 2 mechanisms, retaining value within its native Layer 1 tokens. The uptick in network activity on Solana has resulted in elevated transaction fees, indicating heightened usage and broader adoption. Solana's growing narrative is particularly resonating within the meme community and gaining institutional confidence thanks to its emphasis on network performance.

Furthermore, the firm underscores the promise of projects like Chainlink, which has made leaps forward, clinching a Total Value Secured (TVS) of about $25 billion, roughly half of its peak valuation. Nevertheless, LINK's current pricing remains at only 25% of its all-time high, pointing to substantial untapped value. Positioned as the leading oracle provider, Chainlink is set to benefit from the growth of RWA ventures cropping up within the sector. Chainlink HashKey Capital also highlights the prospects of narrative-driven altcoins, particularly those centered on AI, RWA, DePIN, and memecoins.

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