Forbes: A Guide to Strike It Rich in the 'Competition Coin Boom Season' in 2025

Source: Forbes

Compiled and organized by BitpushNews

Block reward halving, Bitcoin reaching new highs, and the peak season of altcoin competition - is this the classic formula for a bull market? Or perhaps not?

First of all, the BTC halving has reduced its issuance rate, leading to a supply shortage. Afterwards, BTC will continue to rise to a new all-time high, followed by the speculation of competitive coins. Investors are more inclined to pursue higher returns, and the competitive coin season has fully erupted. Shortly after the most recent halving of Bitcoin, it broke through the $100,000 mark - a historic milestone. However, the competitive coin market has not seen a sharp rise at the moment.

Where is the usual rebound? Has the classic plot been disrupted? The surge of institutional capital and the liquidity tightening caused by the high interest rates, combined with Trump's aggressive and bold views on cryptocurrency, have confirmed one thing: this cycle will be different from any cycle we have seen before.

What is different about this cycle?

Each cycle has four phases: accumulation, uptrend, distribution, downtrend. While the mechanics behind these phases are well known, timing the market is one of the most recognized skills. You are trying to predict when we enter a specific phase to formulate a trading strategy. However, despite the predictable patterns that cycles follow, we must not forget the broader market context - cryptocurrencies have experienced many changes in the past year.

Institutional Capital

The increasing participation of institutional investors in the Bitcoin market has reshaped the dynamics of the market. With the emergence and growth of cryptocurrency ETFs, Bitcoin has become the seventh largest asset globally and a new choice for institutional investors. The increased involvement of institutional investors generally brings greater price stability. However, this may not be good news for competing coins, as volatility and significant adjustments could redirect capital flows to competing coins. Reduced volatility means reduced returns that may flow back to the market of competing coins.

This year is special. The launch of Bitcoin spot ETF has brought a large amount of traditional financial capital into the cryptocurrency market. The influx of institutional funds into these ETFs has caused a supply shock to Bitcoin, enhancing its dominant position. The demand for Bitcoin caused by ETFs directly affects its dominant position, which is currently about 56%, an important indicator often overlooked by novice traders.

It measures the market share of BTC relative to competing currencies, which can reveal whether we are in a Bitcoin peak season (BTC performs well) or a competing currency peak season (competing currencies perform well). The strong dominance of BTC combined with a stable Bitcoin price means what? Selling off competing currencies. In this cycle, the Bitcoin spot ETF has extended Bitcoin's dominant position. This new variable did not exist in the previous bull market, making the competing currency peak season in 2025 undoubtedly unique.

Macro: Liquidity and Regulation

If you ask any financial executive what the most important financial indicator is, they will tell you it is liquidity.

In 2023 and 2024, US interest rates rose to one of the highest levels in years. Despite dropping from 5.25% a year ago to 4.19% now, it is still a relatively attractive yield for risk-free assets. On the other hand, interest rate cuts often fuel bull markets in cryptocurrencies for a simple reason - they create favorable conditions for the prosperity of higher-risk assets. After all, risk-free government bonds with a yield of 0.11% in 2021 are as attractive as losing capital due to inflation. Low interest rates mean cheaper borrowing and higher liquidity, which in turn prompts investors to put their money where they can get higher returns. Where? Yes, you guessed it. Cryptocurrencies.

Trump's victory undoubtedly shook the cryptocurrency world. The 'Bitcoin Act' has sparked intense debate inside and outside the currency circle. If passed, the Senate's legislation will require the Treasury and the Federal Reserve to purchase 200,000 bitcoins each year for 5 years, accumulating 1 million bitcoins. In other words, about 5% of the global supply. Undoubtedly, supportive regulations for cryptocurrencies are a significant step towards widespread adoption of crypto assets, and Trump's position has proven to be able to stimulate positive emotions. Shortly after the future president confirmed the creation of the BTC Federal Reserve plan, BTC reached a historic high.

In the case of BTC maintaining its dominant position, high interest rates, and US support for cryptocurrency regulations, should we expect a comprehensive cycle of competitive coins in 2025? This is a billion-dollar question.

When will the 'Competitive Coin Boom Season' come?

If history has taught us anything, it is that the soaring of competing coins often follows the major trend of Bitcoin. However, it is impossible to estimate the magnitude of these price fluctuations, or how long it will take for competing coins to skyrocket after Bitcoin reaches a historic high.

Wave Digital Assets CEO David Siemer said, 'I don't think we will see a dramatic altcoin season like in 2021 in the near future, which means BTC's dominance will drop below 40%. But as BTC continues to rise, we will see a significant increase in the value of altcoins.'

Siemer later added: 'If we want to make competing coins break through relative to BTC like in 2021, the usage (adoption) and value (revenue generation) of competing coins need to increase by several orders of magnitude,' and emphasized that this may take at least three years. But once it starts, the season of competing coins is easy to identify in itself, because there are some quite bullish signals:

The price of competitive coins is growing rapidly, outperforming Bitcoin, especially large-cap altcoins. This means that not only are competitive coins as a whole rising, but their gains are greater than those of Bitcoin.

The dominant position of competitive coins is soaring, just like the peak season of competitive coins in May 2021. These tokens occupy a dominant position in the market, and the total market value of the top 100 competitive coins is 1.3 times that of Bitcoin.

FOMO-driven emotions, high trading volume, and risk-taking investors are intensifying buying pressure and price momentum.

altseason is not merely a random period during which altcoins outperform Bitcoin; it is a distinct seasonal phenomenon from January to May.

further reading: pic.twitter.com/9ypjf4HmfW

— Aporia (@0xaporia) December 16, 2024

Cane Island Digital Research shared its findings on the seasonal rebound of competitive coins in its 'Competitive Coin Boom Season Proof', indicating that ETH represents the competitive coin market experiencing a bull market. In addition, it also mentioned the repetitive pattern of the competitive coin boom season from January to May.

Narrative-driven

Although the upcoming competitive currency boom season may be quite different from the boom season we are used to, certain niche tracks have already established a foothold in the cryptocurrency field. After the VIRTUAL token experienced a 24908.4% surge (i.e. 249 times), it can be said with certainty that we have entered a new level of narrative dominance.

Although memecoins may surpass real-world assets or AI in other fields, AI agents are unique and are often seen as the driving force behind the next super cycle. Artificial intelligence is still at its peak, and with the advancement of AI agents, the on-chain AI economy has already captured a large portion of the market share. According to Kaito AI's data, this market share will reach its peak at 50% in 2024. Driven by unprecedented demand for AI services, this trend is likely to continue in 2025.

AI mindshare dropping since hitting the 50% peak.

DeFi also remaining above memes. pic.twitter.com/HzTqaV4Key

— Kaito AI (@_kaitoai) December 20, 2024

The institutional adoption triggered by companies like BlackRock has also influenced real-world asset areas, making tokenization a fundamental part of the crypto world. While most attention is focused on AI and AI agents, traditional finance is exploring tokenization as a viable business option, with major banks like JPMorgan and Goldman Sachs trying to disrupt the financial market.

How to prepare for the 'Competitive Coin Peak Season'?

As we enter 2025, before the competitive season of the coin comes, we can keep a few points in mind.

Bitcoin's dominant position is a classic reference indicator. Please make good use of it to grasp the trading opportunities. Websites like BlockchainCenter.net can help assess whether the market is currently in the altcoin season or the bitcoin season. It is important to note:

The cryptocurrency market is largely driven by emotions, so please pay attention to regulatory measures, overall economic trends, or native cryptocurrency narratives (DeFi, AI agents, meme coins).

Not all competitive coins will follow the dynamic changes in the price of Bitcoin. Historically, projects with strong fundamentals or that align with emerging narratives (such as AI projects) perform better. However, it is important to prioritize quality over quantity and focus on projects with strong fundamentals, active teams, and ideally products that have a strong market fit and can inspire a large community.

A pullback is a healthy phenomenon. They indicate that the market is consolidating and allow investors to enter positions before the next uptrend. The altcoin season usually occurs in the later stages of a bull market. Please be patient.

Conclusion

The cryptocurrency market is maturing. Each cycle is a stepping stone and should be seen as a learning lesson. While meme coins are still reaping rewards, new narratives are becoming increasingly influential.

But the most interesting thing is that the current popular narratives, such as AI agents, are not just temporary trends. What is most important is that we will now face greater impact from macro factors and institutional adoption than any previous bull market. Does this mean that we should expect different dynamics in competing coins this time? To some extent, yes. We should also not blindly follow the patterns of the past few years. The question is not whether the peak season of competing coins will happen, but when it will happen and how it will be different from the past few years.

Get ready to face the challenge!

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Disclaimer: The article only represents the author's personal opinions and does not represent the viewpoint and position of Gate.io. All content and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and trades, and the author and Gate.io shall not be liable for any direct or indirect losses incurred by investors' transactions.

The article 'Forbes: The Gold Rush Guide to the 'Competition Coin Boom Season' in 2025' was first published in 'Block Times'.