On-Chain Data Evaluation Model - Altcoin Season
One day while I was in class, Xiao Chi, the general manager @FC_0X0, sent me a WeChat message saying: "There is a data, which is the scissors difference between the total inflow of stablecoins to the exchange and the value of BTC withdrawn in US dollars, that is, the remaining potential purchasing power and the volatility of Altcoins may have a direct relationship. Can we use this logic to look at the timing of the Altcoin season?"
Coincidentally, my courseware also mentioned the data observation on the potential conditions of "capital outflow", which just corresponded to the launch time of some large-cap Altcoins. However, at that time it was only a rough outline, and I seemed to have vaguely thought of some areas that had been overlooked before...
After returning, I did some data sorting, and based on the inspiration from Xiao Chi's thoughts, I re-conceived a set of effective visual indicators to judge the "Altcoin season". Here is my thinking process:
Altcoin Season Condition 1: Capital Outflow Condition Evaluation
From the data, the theoretical outflow value is the largest in the periods of 2023.10-2024.3 and 2024.11-2024.12, which means that the possibility of an "Altcoin season" is higher in these 2 periods. In addition, there is also a short period between August and September, but in terms of both the formation scale and the duration, it is not as good as the above two periods, so its influence is relatively weak.
Altcoin Season Condition 2: Capital Inflow of Mainstream Assets
From the data, in the periods of 2023.10-2024.8 and 2024.10-2024.12, the three major mainstream assets simultaneously showed net capital inflows, and reached their peaks in March and December 2024. This is also the most FOMO time point in the current cycle so far.
Altcoin Season Condition 3: Positive Momentum of Altcoin Market Cap Dispersion
In Figure 3, the red line is the 7D average and the blue line is the 30D average; from the data, in the periods of 2023.10-2024.4 and 2024.11-2024.12, the red line crosses the blue line, indicating that the liquidity in the crypto market is beginning to tilt towards Altcoins, and the market cap of Altcoins is entering a positive growth momentum stage.
Summary
The above 3 conditions are considered from different perspectives. Condition 1 represents the possibility of capital outflow; Condition 2 represents the overall sentiment and risk preference; Condition 3 represents the tilt of liquidity. When all three conditions are met, it is highly likely that the Altcoin season is coming.
Currently, Condition 2 is met, but 1 and 3 are not; so we can conclude that the foundation for the Altcoin season to start is there, but the liquidity is still concentrated on mainstream assets (especially BTC), and the capital in the market has not yet flowed too much to Altcoins.
However, we can also see that the "negative outflow" in Condition 1 is gradually narrowing, which is a positive signal. Although the Altcoin season that the friends are looking forward to may have to wait a little longer, what is meant to come will come.
The content shared in this article is for communication and research purposes only, and is not investment advice.
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