This Bitcoin rally has not been followed by Altcoins, with Bitcoin's market dominance reaching 64.2%, a four-year high. Although the timing of the Altcoin season remains uncertain, we can observe which Altcoins perform stronger than Bitcoin during market volatility, identifying fund preferences that may potentially continue their strong momentum.
VX：TZ7971
Which tracks should be focused on?
Key focus areas are: AI, L1, MEME, and DeFi
AI
The previous narrative was initiated by AI, starting from the combination of GOAT and meme, exploring more possibilities and applications. The AI frenzy created a bubble that burst with the Trump family's consecutive token launches, ultimately causing most AI tokens to drop over 90% and reset valuations.
The bubble's burst doesn't signify the track's end, but rather a mechanism to eliminate mixed-quality projects. As Web 2 AI continues developing, Web 3 AI projects have undergone a reshuffle. If Web 2 AI's development can transfer to Web3, the current AI track's valuation is relatively cheap, and surviving projects have proven fundamentals. If the Altcoin season arrives, this track may capture Bitcoin's overflowing liquidity.
VIRTUAL, ARC, ALCH, Swarm, Zerebro
L1
Public chain coins have always been a relatively stable choice during Altcoin seasons, with the overall logic being that a public chain's development determines its ecosystem projects' ceiling and captures the most liquidity.
Unlike 2021, funds are no longer paying for "EVM replication", but seeking public chains with genuine TPS and developer tools that can bring new applications. Once catalyzed (exchange listings, institutional investments), price elasticity will be significantly higher than established L1s.
Monad, MegaETH
MEME
Bitcoin itself is the crypto's largest meme coin. Meme coins have become a prominent category and are likely to survive, with key factors being their role as consensus and cultural carriers. Top meme coins of each public chain can be seen as leveraged public chain coins. Most meme coins are native to the chain, with pricing not monopolized by centralized exchanges, easily creating wealth effects. In crypto, where wealth effects exist, continuous liquidity and participants follow.
DeFi
In crypto, DeFi is a rare track with genuine business models: Perp Dex and Dex earning transaction fees; lending earning interest spreads; Yield Farming earning deposit/withdrawal fees; LaunchPad earning token issuance fees.
HYPE, JUP, Aave are leaders in the DeFi field, importantly, they all have token buyback mechanisms. As the Altcoin season arrives and liquidity recovers, increasing transaction volumes, top DeFi protocols' network effects will drive overall project profitability. Higher profitability means stronger buyback power, increasing token demand and price appreciation probability.
When Will Rotation Occur
The Altcoin season's start means funds flowing from Bitcoin to riskier, smaller-cap Altcoins. Two key observation indicators: first, whether Bitcoin can stabilize above 90,000, providing market confidence; second, and more importantly, whether Bitcoin's market dominance (BTC.D) begins to decline, reflecting fund preference expansion.
Currently, funds are concentrated in BTC with stable growth. If BTC.D starts significantly declining, returning to early year's 57% level, it signals funds officially overflowing to the Altcoin market, potentially triggering a full rotation.
In other words, the true Altcoin season start isn't just Bitcoin continuously hitting highs, but a process of rising risk appetite and fund dispersion from BTC to other thematic tracks. When both occur simultaneously, we'll see a comprehensive market revival. Now is the time to observe, screen, and position.
