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Home » Hotcoin Research: Will Bitcoin Reach $100,000 and Signal the Arrival of Altcoin Season?
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Hotcoin Research: Will Bitcoin Reach $100,000 and Signal the Arrival of Altcoin Season?

By adminMay. 19, 2025No Comments16 Mins Read
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Hotcoin Research: Will Bitcoin Reach $100,000 and Signal the Arrival of Altcoin Season?
Hotcoin Research: Will Bitcoin Reach $100,000 and Signal the Arrival of Altcoin Season?
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Article Overview

This article provides an in-depth analysis of the characteristics and driving factors of the current market cycle from multiple dimensions, including the macroeconomic environment, market structure, on-chain indices, features of the current altcoin season, and potential trends in promising sectors. This article is sourced from a piece written by Hotcoin Research and compiled and translated by TechFlow Deep Tide.

(Background Summary: Bitcoin price surges to $107,000! Traders greedily anticipate a new high of $117,000)

(Contextual Supplement: The Federal Reserve has secretly printed money! In May, it purchased $43.6 billion in government bonds, could Bitcoin benefit from quantitative easing?)

1. Introduction

As Bitcoin’s price has once again crossed the $100,000 threshold and Ethereum has rebounded significantly, the overall crypto market is on the rise. On-chain activities and trading volumes across multiple public chains have surged, indicating a renewed enthusiasm for capital inflow and a continued recovery in risk appetite. Under the dual influence of macroeconomic positivity and intrinsic market dynamics, the cryptocurrency market is currently in a high-energy accumulation phase.

In this context, market participants are widely concerned about whether the altcoin season has commenced. This article conducts an in-depth analysis of the characteristics and driving factors of the current market cycle, as well as a forward-looking outlook on potential trends and risks, providing readers with a reference for understanding the current landscape and future trends of the crypto market.

2. Macroeconomic Background and Market Structure Analysis

Amidst the easing of US-China tariff tensions, global liquidity expansion, President Trump repeatedly calling for interest rate cuts, and the continuous improvement of the crypto regulatory environment, the structure of the crypto market has undergone profound adjustments: Bitcoin’s dominance has receded, the altcoin season index has strengthened, and the supply of stablecoins has surged, laying a solid foundation for the subsequent evolution of the altcoin market.

1. Macroeconomic Environment and Policy Background

Recently, several favorable signals for risk assets have emerged in the global macroeconomic environment. US inflation has significantly retreated, with April’s CPI year-on-year at only 2.3%, marking a four-year low, allowing the Federal Reserve to remain on hold in May, keeping the federal funds rate in the 4.25%-4.50% range. Meanwhile, the US-China trade war has seen a notable thaw: both sides have reached a 90-day tariff suspension agreement, reducing US tariffs on Chinese products from the original 125%-145% to 10%-30%, while China has lowered its tariffs from 125% to 10%. This “ceasefire” has alleviated concerns about economic recession, prompting Wall Street institutions to lower their recession probability expectations. President Trump has also repeatedly pressured the Federal Reserve to cut interest rates as soon as possible. Although Federal Reserve officials remain cautious about premature rate cuts, the market anticipates two moderate cuts in the second half of the year.

This series of macro-positive messages has boosted global risk appetite, with capital flowing back into stocks, cryptocurrencies, and other risk assets. The improvement in the macro environment has laid the groundwork for a structural bull market in the cryptocurrency market by 2025: expectations for easing have strengthened, liquidity has returned, and investors holding cash are prepared to buy various crypto assets at lower prices. As of May 15, the total market capitalization of cryptocurrencies has climbed to $3.5 trillion.

2. Changes in Crypto Market Structure

The structure of the crypto market has shown significant changes in this cycle. Firstly, Bitcoin’s dominance has reached a peak and then retreated. At the beginning of the year, due to the influx of institutional funds, Bitcoin’s market share (BTC Dominance) rose steadily, approaching a high of 64-65% in early May, reflecting that the market was still in a “Bitcoin season.” As Bitcoin returned to the $100,000 mark on May 9 and continued to rise, funds began to rotate from Bitcoin into a broader range of altcoins. According to TradingView data, Bitcoin’s dominance dropped by about 4.6 percentage points in just one week, marking the largest weekly decline of the year. The decline in Bitcoin’s share of the crypto market is one of the typical signals of the historical onset of an “altcoin season.”

Source: TradingView

At the same time, the overall market capitalization of altcoins has rebounded significantly. The total market capitalization of altcoins (excluding BTC) fell to about $930 billion in April, but has since rebounded strongly in May, currently exceeding $1.45 trillion, successfully breaking out of the descending wedge pattern that has persisted since the end of 2024, entering a new upward wave. This breakout corresponds to a significant decline in the Bitcoin dominance curve, as funds “depart” from Bitcoin as a single asset and are reallocated to other cryptocurrencies.

Source: CoinGecko

3. Analysis of the Altcoin Season Index

A more intuitive sentiment indicator is the “Altcoin Season Index.” According to Coinglass data, this index fell to a low of 14 on April 26. Since then, the Altcoin Season Index has rapidly risen to 31. Although it has not yet reached the threshold of 75 for a “formal altcoin season,” it has moved away from the Bitcoin-dominated state and into a neutral to strong area. This confirms that market sentiment is shifting from conservative to risk-seeking: investors are beginning to increase their positions in altcoins. This shift in sentiment is also reflected in on-chain data, with the number of active addresses and trading volume increasing significantly across multiple public chains in early May, indicating a rise in investor participation. The total trading volume on DEXs also increased by 30% in one week, reaching $8.4 billion. The long-dormant on-chain activities are becoming active again, signaling a warming of market interest.

Source: Coinglass

Additionally, the total market capitalization of stablecoins reached an all-time high of about $245 billion in early May. Among them, the leading stablecoin USDT saw a surge in supply, with its market cap surpassing $150 billion. In contrast, during the peak of the 2021 bull market, USDT was about $83 billion. The soaring supply of stablecoins, acting as a bridge between fiat and crypto, indicates that a vast amount of capital is entering the market through stablecoin channels and waiting for the right time to enter, providing “fuel” for further increases in altcoins, as funds are expected to continue converting from stablecoins into BTC and various altcoin assets, driving a new round of market activity.

3. Characteristics of the Current Altcoin Market Cycle

Historical experience shows that altcoin seasons usually occur after significant rises or peaks in Bitcoin, with capital seeking higher yields flowing into mid- and small-cap cryptocurrencies. Bitcoin’s surge above $100,000 has acted as a catalyst for the current altcoin season, with the rhythm of capital rotation continuing in line with previous cycles. However, compared to past altcoin seasons, the current market cycle displays notable differences in terms of duration, price structure, and participating assets.

Duration and Activation Rhythm:

Previous altcoin booms often lasted for months during Bitcoin’s range trading or pullback phases. In contrast, as of mid-May, the current altcoin cycle has only shown initial signs, with many altcoins experiencing moderate gains. As one analyst humorously noted, “Most altcoins have dropped 90% from last December’s highs, and if they rebound 10% this week, some are shouting, ‘The long-awaited altcoin season has arrived.'” The full explosion of the altcoin market has not yet reached the level of excitement seen in previous cycles. The altcoin season index has just begun to rise from the bottom but is far from reaching the typical euphoric line of 75; social media attention and retail FOMO sentiment are still brewing. Therefore, the current altcoin market may exhibit a slower rhythm and last longer, unlike the rapid surges and drops of the past.

Price Structure and Rotation Sequence:

The current altcoin market displays characteristics of “the large market leading, gradually spreading.” At the beginning of May, large-cap coins such as ETH, Solana, and BNB initiated the rally, with daily gains ranging from 5-15%. Subsequently, mid-cap mainstream coins (such as MKR, CRV, AAVE, etc.) also experienced catch-up rallies. In contrast, small-cap coins and long-tail assets did not immediately soar in tandem. This may reflect a current preference for projects with fundamental support, indicating that speculative trading has not yet fully commenced. Of course, as the market evolves, it is not excluded that smaller and mid-cap coins may catch up or even experience explosive growth.

Driving Narratives and Nature of Funds:

The altcoin boom in 2017 was driven by the ICO concept, with many new tokens skyrocketing based on their whitepapers; in 2021, narratives such as DeFi, Dogecoin frenzy, and NFTs/metaverses took turns, bolstered by massive retail sentiment. The narrative of the current market cycle is more diversified and “professionalized.” Several dominant themes in the market, such as AI and RWA, are attracting not only speculative funds but also a considerable proportion of institutional and industrial capital participation.

Investor Structure and Portrait:

The characteristic of the participant structure in the current cryptocurrency market is a significant decrease in retail participation compared to the previous cycle, while the proportion of institutional capital has increased. Institutional investors are playing the role of “incremental capital” in this cycle. This means that the current market is often characterized by institutional versus institutional competition. The current market participants are more experienced “veterans” who have gone through multiple cycles; funds are switching rapidly between sectors, and the duration of hot topics is shortening, lacking the wild enthusiasm of retail traders.

Time to Seize the Moment: The Unilateral Surge

This validates the characteristic of short-term speculation in the market due to the absence of retail investors, while lacking a long-term trend. Additionally, the increased share of the derivatives market indicates that more professional funds are engaging in leveraged trading strategies, such as futures and options, which is a stark contrast to the previous behavior of retail investors who only purchased spot assets. All these factors contribute to a more complex rhythm and structure of volatility in the current market cycle.

Regulatory Environment and Market Ecology

The past wave of altcoins often occurred during periods of relative regulatory absence and “wild growth”, whereas global regulations are now accelerating their intervention. In this market cycle, regulatory factors have actually become a tailwind: the U.S. regulatory stance is leaning towards looseness, ETF approvals, trading openings in places like Hong Kong, and Bitcoin as a strategic reserve have all provided positive expectations for the market. This means institutional funds can participate more aggressively in crypto asset investments. This ecological change suggests that the current altcoin season may be more orderly and place greater emphasis on value support.

Analysis of Potential Tracks and Popular Narrative Trends

1. The Continued Frenzy of Meme Coins

Undoubtedly, meme coins have become the most active track in the cryptocurrency market. The launch of Pump.fun has lowered the barrier to creating meme coins to zero, allowing “everyone to mint coins”, thus initiating a gold rush for meme coins. Despite the overall market being in a state of turmoil earlier this year, the BNB chain has become the second largest active network for meme coins, next to Solana, propelled by a series of initiatives such as CZ’s endorsements, the launch of the meme launch platform Four.me, the introduction of the Binance Alpha sector, and the TGE of the Binance wallet. Recently, meme launch platforms have gradually broken the dominance of Pump.fun. With the launch of Raydium’s LaunchLab and the emergence of platforms like Letsbonk.fun and Believe, and Eliza Labs releasing auto.fun, which replicates the “zero-code issuance” experience of pump.fun while adding AI agent deployment features, meme tokens are set to continue exhibiting explosive growth, further enhancing speculation and volatility.

In addition, established meme coins like DOGE and SHIB have finally found new catalysts in 2025 after a prolonged period. Along with the resurgence of older meme coins, newer entrants such as BONK, WIF, PEPE, MOODENG, POPCAT, and FARTCOIN have taken turns to drive the price up. As a meme coin associated with Trump, TRUMP has experienced fluctuations since its launch in January, and under the influence of the “TRUMP Dinner” event on May 22, its price has shown significant rebounds. This indicates that meme coins with active communities and sustained influence will gradually break free from the limitations of short-term speculation and begin to develop a more stable consensus value.

The funding for meme coins mainly comes from speculative retail investors. Current on-chain data shows that transactions are frequent but with relatively small individual scales, indicating a clear characteristic of quick entry and exit. At the same time, discussions about meme coins on social media platforms like Twitter and Reddit are increasing, with some KOLs starting to recommend “today’s tenfold potential coin” daily, suggesting that speculative sentiment is brewing.

2. The Heat of the AI Track Remains Strong

Since the AI wave ignited by ChatGPT last year, a batch of AI concept tokens, such as FET, AGIX, and OCEAN, briefly took off. However, with the market cooling down, these tokens underwent a deep pullback. Entering 2025, global attention towards artificial intelligence continues to rise, coupled with a bullish trend in the crypto market, the AI track has become active again. Since April of this year, several AI concept tokens have experienced rapid surges, far exceeding the overall market growth. Fetch.ai (FET) has continued to announce technological advancements over the past few months and has partnered with Google Cloud, showing a positive fundamental outlook. Technically, FET has formed a rounded bottom after bottoming out in February, creating a classic cup-and-handle pattern in mid-April, indicating that the market is full of expectations for its return to a bull market.

Virtuals Protocol (VIRTUAL) and ai16z (AI16Z), two AI agent projects, achieved impressive gains by the end of 2024, but lost about 90% of their market value during the overall pullback at the beginning of this year. With the warming of the market in April, both experienced explosive rebounds, refocusing market attention on the popular concept of “AI agents”. In the second half of 2025, if global AI applications continue to explode, AI narrative tokens may welcome a dual strengthening of fundamentals and market sentiment.

3. Layer 2 Set to Rebound

The Layer 2 expansion of Ethereum has been one of the most significant technological trends in the crypto space over the past two years. As we enter 2025, this track continues to evolve and has seen some new changes. The Layer 2 landscape is displaying a multi-polar structure: Arbitrum leads in user numbers and ecological DApps, Optimism maintains influence thanks to OP Stack, while Base is rapidly expanding its user base leveraging Coinbase’s resources. In contrast to ecological progress, the performance of Layer 2 project tokens in this market cycle has been relatively lackluster. Since April, both ARB and OP have rebounded moderately with the market, but their overall gains lag behind the broader market. Particularly for Arbitrum, the community governance turmoil following last year’s airdrop and the subsequent 80% drop have undermined confidence, leading the market to be cautious in its recovery expectations. Despite short-term token performance being mediocre, the long-term potential and strategic position of Layer 2 tracks are still viewed positively by industry insiders.

It’s worth noting that the strong resurgence of high-performance L1 networks like Solana, BNB, and Sui poses certain competitive pressure on L2. However, considering compatibility and security, L2 remains the preferred path for the expansion of the Ethereum ecosystem. If the market continues to evolve, subsequent funds may rotate from overheated small-cap tokens back to these high market capitalization platform coins, achieving a rebound.

4. The RWA Track is Favored by Institutions

RWA has emerged as another significant narrative for institutions in this cycle of the crypto market. Against the backdrop of continuous interest rate hikes by the U.S. Federal Reserve leading to soaring rates on traditional assets, the embrace of RWA by DeFi is regarded as a “win-win” strategy: DeFi users can gain stable on-chain yields, while traditional institutions can expand their financing channels. MakerDAO and Ondo Finance are the two pillars of the RWA track. MakerDAO has configured national bonds through its “Endgame Plan”, providing reliable yields for its stablecoin DAI, and MKR token holders benefit from the protocol’s profits, enhancing its value; Ondo directly offers tokenized U.S. Treasury bond funds to institutions and large holders, innovatively allowing on-chain users to conveniently hold traditional financial products. In addition, Maple Finance (providing on-chain credit for institutions) and Centrifuge (asset-backed tokenization platform) are also worth noting. Each of these projects has its own focus but collectively drive the integration of on-chain and off-chain finance.

Although the RWA concept is hot, the participation of ordinary retail investors is currently relatively limited. Many RWA products involve compliance requirements (KYC, accredited investor thresholds) and professional knowledge, leaving small investors mostly at the stage of hearing about the concept. This suggests that the market for the RWA track is largely driven by large funds.

Conclusion and Outlook

Various signs indicate that the crypto market has significantly warmed up, but the true peak of frenzy may still not have arrived; the “altcoin season” is on the horizon. Bitcoin’s dominance has retreated from its highs, a large number of altcoins have surged in turn, new narratives continue to emerge, and market sentiment has shifted from caution to greed… Overall, the market is currently in a transition phase from a “Bitcoin market” to an “altcoin market”. The altcoin season has begun to brew and unfold, but it has not yet reached the most frenzied climax.

In summary, the current cryptocurrency market is at a delicate balance point: Bitcoin is leading the charge, altcoins are poised for action, and the rationality of institutions intertwines with the emotions of retail investors. The altcoin season is brewing but has not fully erupted. We anticipate that as macroeconomic tailwinds continue and funds pour in further, the altcoin sector may usher in a more tumultuous climax in the second half of the year. However, this time, the market may not simply replicate past crazy models but evolve into new characteristics under a mature market environment.

Macro liquidity will be a decisive factor influencing the length and height of the current market cycle. A consensus in the current market is that the U.S. Federal Reserve may begin to cut interest rates in the second half of 2025. Once we enter a substantial rate-cutting phase, global liquidity is expected to further loosen, and risk assets are likely to experience a “second half acceleration”. Thus, this bull market in crypto may witness a “double peak”—rising in the first half driven by expectations and surging again in the second half due to actual easing materializing. This means that the altcoin market may not only not come to an abrupt halt but may instead see a second spring ahead. If liquidity continues to improve and narratives continue to ferment, the climax of the altcoin season may occur in the second half of 2025 or even early 2026. Until then, this feast is likely to continue for a while.

Risk Warning

The cryptocurrency market is highly volatile, and investment itself carries risks. We strongly advise investors to engage in investments only after fully understanding these risks and under a strict risk management framework to ensure the safety of their funds.

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