By Rajagopal Menon
The 1892 book, "The Memoirs of Sherlock Holmes", by Sir Arthur Conan Doyle, is a collection of short stories. One of the stories is “Silver Blaze,” a mystery about the disappearance of a famous racehorse the night before a race and the murder of the horse’s trainer. Sherlock Holmes solves the mystery in part by recognising that no one he spoke to in his investigation remarked that they had heard barking from the watchdog during the night. The fact that the dog did not bark when you would expect it to do so while a horse was stolen led Homes to the conclusion that the thief was not a stranger to the dog, but someone the dog recognised and thus would not cause him to bark.
This concept of noticing the absence of an expected reaction offers a valuable lens through which to view the recent phenomena in the crypto market, particularly the explosive rise of meme coins like dogwifhat, Floki, and Pepe, boasting increases of 2000 per cent, 582 per cent, and 528 per cent, respectively. Why are these meme coins seeing such substantial gains, while traditional altcoins lag? The answer may lie in the actions of crypto whales, similar to the mysterious figure in Holmes' mystery. These whales, well-known to seasoned investors, might be orchestrating the meme coin pumps. This theory gains credence when considering the behaviour of millions of retail investors who, having already maximised their allocations to favoured cryptos, find themselves drawn to the speculative allure of meme coins.
But what about the newcomers, the marginal buyers essential for a true altcoin season to ignite? Their absence is keenly felt, as it is their participation that typically fuels the widespread surge in altcoin valuations. The current trend of surging meme coins could potentially draw these vital new investors into the market.
What is Altcoin Season?
Altcoin season describes a period during which altcoins outshine Bitcoin, often indicated by pairings like ETH/BTC. However, this phenomenon has been conspicuously absent of late, with even Ethereum faltering against Bitcoin. Traditionally, Bitcoin's rally leads to profits being redirected into altcoins, beginning with Ethereum and trickling down to smaller cap coins. This cycle appears to have been disrupted, with investments jumping straight to micro-cap meme coins.
Why the Delay in Altcoin Season?
The delay could be attributed to the introduction of spot Bitcoin ETFs and a starkly different economic climate from previous cycles. The direct flow of investment from Bitcoin ETFs to altcoins is less apparent, compounded by today's high interest rates, inflation, and the looming threat of recession.
Signs of an Upcoming Altcoin Season
A resurgence in retail investor activity could signal the approach of altcoin season. This resurgence might be reflected in increased exchange volumes, trending search terms, and the popularity of crypto apps, alongside significant announcements from crypto projects.
Choosing the Right Altcoins
When selecting altcoins, focus on those listed on major exchanges with compelling fundamentals and narratives. Careful examination of their whitepaper, tokenomics and potential for long-term appreciation is advisable.
The Bigger Picture
Beyond speculation, the essence of cryptocurrency lies in its potential to offer sustainable alternatives to traditional financial systems. While some projects will fail, others may profoundly alter our financial landscape. Bitcoin's evolving role should not be overlooked, as it too could redefine its stance in the global economy.
The arrival of the next altcoin season is influenced by a confluence of market dynamics, investor behaviour, and macroeconomic conditions. While timing the market precisely is challenging, staying attuned to these indicators is essential for those looking to leverage the forthcoming wave of crypto opportunities.
(The author is the Vice President of crypto investment platform WazirX)
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.