Bitwise Investment Director Matt Hougan attributed the parallel growth of Bitcoin and altcoins to the influx of new funds into the crypto industry through ETFs.
See more
2/ IMO the primary driver of alt season is a classic «wealth effect.» Crypto natives make money in bitcoin, feel rich, and then look for more speculative assets to invest in.
— Matt Hougan (@Matt_Hougan) March 8, 2024
“There is a lot of discussion about the early start of the altcoin season. Some are surprised by this, given that Bitcoin is “only” a few hundred percent above its low. The main driver of the altseason is the classic “wealth effect.” Crypto investors make money on Bitcoin, feel rich and are looking for more speculative assets to invest in,” he said.
According to the expert, this also happens in the traditional economy, where people make money from large companies and then look for small firms for venture investments.
See more
4/ What catalyzes alt season is not the percentage return of bitcoin but the cumulative size of the wealth effect. And since the November 2022 lows, bitcoin’s market cap has grown by $1 trillion. $1 trillion is a lot of money!
— Matt Hougan (@Matt_Hougan) March 8, 2024
“They also visit Vegas more often. Market rotation and “wealth effects” are a story as old as time. The altseason is catalyzed not by the percentage of Bitcoin returns, but by the overall “wealth effect.” Since November 2022, Bitcoin’s capitalization has grown by $1 trillion – that’s a lot of money,” Hougan explained.
Thus, rich crypto investors move what they earn from the first cryptocurrency to other digital assets. Many of the altcoins are relatively small, so it doesn’t take a lot of money for prices to skyrocket, he added.
“An additional and more exciting catalyst is the significant improvement in the technological infrastructure for altcoins in past cycles. The update of Dencun in Ethereum and the development of second-layer solutions are real technological achievements,” noted CIO Bitwise.
Hougan explained that the current bull market is different from previous ones. Historically, the altseason limited Bitcoin’s growth as capital moved from the first cryptocurrency to others. However, the 2024 rally is driven by outside money flowing into the ecosystem through ETFs.
See more
12/ Historically, alts season capped the rise of bitcoin as marginal capital shifted out of bitcoin into the rest of the market.
But Bitcoin’s 2024 rally is being driven by entirely new money — non-crypto-native money — flowing into the ecosystem via ETFs.
— Matt Hougan (@Matt_Hougan) March 8, 2024
According to him, the trend will continue as long as more funds flow from the ETF into Bitcoin than flow from it to other cryptocurrencies. The result of this will be an “all-season” instead of a classic altcoin season.
“Last thing: be careful. Many terrible projects are funded in bull markets, and many are already overvalued. Of course, there are also excellent projects. But not everything that grows deserves it,” the expert concluded.
Hougan previously predicted that Bitcoin would rise above $80,000 in the foreseeable future due to the success of the ETF.
Recall that in March, the author of the best-selling book “Rich Dad Poor Dad” and entrepreneur Robert Kiyosaki predicted digital gold at $300,000 in 2024.
Subscribe to ForkLog on social networks
Found an error in the text? Select it and press CTRL+ENTER
ForkLog newsletters: keep your finger on the pulse of the Bitcoin industry!
2024-03-10 12:03:00
#Bitwise #explained #growth #altcoins #parallel #Bitcoin #ForkLog
