Ethereum is getting strong again! Is there hope for the altcoin season?

Source: Talking Li and Talking Outside

As BTC has recently broken through the $100,000 mark again and ETH has surged over 40% in a week, people's sentiments seem to have begun to split. Some believe this is merely a brief rise before a significant drop (continuing to wait for a new pullback), while others think this marks the beginning of a new altcoin season (spreading the news, the bull is back).

For those who regret missing out on this surge and are still waiting for a new pullback, the same question arises (just like every time after a rise, waiting for a pullback): if Bitcoin does indeed pull back to a level you are currently targeting, such as $85,000, $79,000, or the previous low of $74,000, would you really dare to buy then?

Not to mention the distant past, since this cycle began, Bitcoin has risen and fallen from a relative range of $15,000 to $100,000. During each past rise, many were waiting for a pullback, swearing that they would buy as soon as there was a pullback, yet during each past drop, many continued to hesitate, forgetting their previous vows. Thus, they waited and waited, watching Bitcoin reach its current position.

In fact, in such matters, we should think more deeply and understand the concept of time frames. We shouldn't always focus on the present or be overly anxious about current performance. We should try to see further into the future and hold tokens that are likely to grow over time. This is the golden rule for reasonable wealth accumulation during a bull market cycle.

To put it bluntly, if you currently hold Bitcoin or other tokens that are performing well, and you have caught a new wave of good upward momentum, consider taking partial profits in batches. If you are just thinking of entering the market for a short-term gamble, set your take-profit and stop-loss according to your risk preference. If you want to wait for a pullback opportunity to enter, then don't keep fixating on the so-called missed low prices from before; you can choose a new target opportunity from a future time frame to consider participating.

Let's return to the current market:

From the perspective of retail investors, the appeal of Bitcoin at $100,000 now is completely different from that at the end of last year (2024). Just looking at the relevant dimensional data from the backend of the Talking Li and Talking Outside public account, the current interaction volume ratio has noticeably decreased, feeling completely different from the peak price period of Bitcoin last year (of course, this may also be due to various comprehensive reasons, and Talking Li and Talking Outside is just a small self-media platform, so data from a single platform may not indicate any significant issues).

On one hand, since Bitcoin reached its historical high (surpassing the peak of the 2021 bull market) last year, the theoretical bull market has continued for more than a year. Although there have been several noticeable pullbacks during this period, Bitcoin reaching above $100,000 again is enough to prove the strong demand for Bitcoin during this bull market. However, judging by the daily comments and discussions, it seems that many people have not effectively grasped Bitcoin's trend during this cycle. In fact, for Bitcoin, the fear is not being trapped but rather missing out continuously. If you still haven't achieved any results from Bitcoin's trend up to now, then you really should reflect on your past trading strategies.

On the other hand, regarding Ethereum, although ETH surged significantly last week, it seems that many are still on the road to recovering their investments. Recently, discussions around the topic of altcoin season have increased again, as ETH's rapid rise has rekindled hope for altcoins.

If we look at the market capitalization and price performance of altcoins, it seems that several altcoins have performed well in the past two weeks, with some already seeing several times their increase. However, from some on-chain data or indicators, it appears we have not truly entered a so-called new altcoin season. For instance, the ETH Macro Index is still below 0, with the current actual value at -1.12. As shown in the figure below.

Similarly, the well-known Altcoin Season Index is currently only at 27, as shown in the figure below.

The possible reasons for this, which we have already outlined in our previous series of articles on the topic of altcoin season, include:

• A massive number of new projects (tokens) have emerged in this cycle, leading to severe dilution of liquidity.

• Institutional demand for BTC (potential future national demand) has disrupted some historical patterns in the crypto market, with BTC being treated as a new macro asset attracting major liquidity.

• Global macroeconomic factors (which we will continue to discuss below) have resulted in more liquidity not yet spilling over into the cryptocurrency market on a large scale.

However, from the current trends in the crypto market, it still largely follows some operational patterns and rules of past crypto cycles; it's just that we find it difficult to grasp the time dimension. In other words, if Bitcoin can continue to oscillate at relatively high levels and Ethereum can perform further, it is still highly likely that a new round of altcoin sector rotation will occur, thereby driving some altcoins to see good upward trends. We have previously outlined this in our articles, as shown in the figure below.

As for which altcoin sectors to prioritize, considering risk issues, I have basically stopped publicly sharing any specific positions since last year, and I personally spend little time following various altcoin projects. Interested friends might consider revisiting our article from January 1 this year, where we provided several narratives worth paying attention to this year, including AI, RWA, DeFi, Memecoins, etc., as shown in the figure below.

In summary, we reiterate that opportunities and risks often coexist. When most people do not see the current situation as an opportunity, you might consider continuing to buy in batches for the assets you believe in. Conversely, when most people agree that a new opportunity has arrived, you can consider selling in batches again. It is crucial to manage your emotions; during a bull market, the most important thing is to preserve your existing profits rather than continuously take risks in pursuit of higher returns.

We mentioned global macroeconomic factors earlier, and now let's delve deeper into this point:

Since Bitcoin's moment of being represented by spot ETFs, along with the increasing deep participation of institutions, Bitcoin and cryptocurrencies have, in some sense, become a form of macro currency (or investment). Therefore, understanding and grasping macro trends will help us make better long-term investment plans.

1) Geopolitical Issues

Aside from the apparent armed conflicts between India and Pakistan, and Russia and Ukraine, the tension between the two major powers, the U.S. and China, has been exerting pressure on the market. Currently, it seems difficult for this situation to be effectively resolved in the short term. Thus, global funds are primarily driven by risk-averse sentiment, supplemented by speculation. In other words, a lot of funds currently do not seem to be entering the risk asset field on a large scale.

2) Tariff Issues

Tariff issues have persisted for some time, and the market has already digested and reacted accordingly. Although there were reports today (May 12) indicating that substantial progress was made in trade talks between the U.S. and China in Switzerland, it seems unlikely that Trump will end the tariff war. Tariffs remain a matter that requires ongoing attention.

3) Inflation Issues/Fed Rate Changes

Here, we mainly focus on the U.S. From the current comprehensive data, it appears that the inflation issue in the U.S. is cooling down, and from Powell's latest statements, it seems to have become relatively softer. We also discussed this in our previous article (May 7): as the Fed's stance has begun to soften, this could be seen as an early signal of liquidity returning. If the U.S. resumes printing money, it will continue to be a significant driving force for the crypto market in the medium to long term.

4) Changes in Global Liquidity

Global M2 is a macro data point we have been monitoring. I remember sharing this data in a previous article (April 1), as shown in the figure below.

5) U.S. Regulations or Policies Regarding the Crypto Industry

There are quite a few aspects to consider here, such as the actual progress of the Bitcoin strategic reserve plan in various states in the U.S., as shown in the figure below.

Additionally, there are developments regarding the legislation for stablecoins (Trump plans to introduce stablecoin legislation before August this year), and the review progress of Ethereum ETF staking issues, among others. With the continuous participation of more sovereign funds and institutional capital, and the introduction of relevant regulations regarding the crypto industry in the U.S. (including Europe), cryptocurrencies are gradually moving from the gray areas (wild growth) to the light (orderly growth).

In short, Bitcoin's price seems to have reset, and it appears that breaking through historical highs again is just a step away. Ethereum's price has also seen a short-term violent surge, and some altcoins seem to be stirring. From the K-line (such as weekly level) indicators, the upward trend appears to be quite clear in stages. However, regarding macro factors, there are still some uncertainties. Therefore, we believe that the current market still belongs to Bitcoin's bull market, and the short-term speculative market dynamics seem to be more significant.

At this time, it is even more crucial to remain rational, not to be swayed by the current optimistic price sentiment, and to avoid carelessly chasing highs or going all-in. You should control your position ratios, such as how much of your portfolio is allocated to BTC, how much to ETH, how much to blue-chip altcoins (like BNB, SOL, PENDLE, LINK, AAVE, etc.), how much to keep in liquidity (USDC/USDT), and how much to speculate on low liquidity or low market cap coins… All of these should be reasonably planned according to your personal risk preferences.

In this field, we are merely using tokens to invest or speculate for profit; never fall deeply in love with any project to the point of being unable to extricate yourself. If you must love, remember that you can only love Bitcoin, or only invest with assets you can afford to lose (funds that do not affect your quality of life) in projects you like and understand.