Is the "alt season" in the crypto market coming? In-depth analysis of market trends and investment strategies

The global market fluctuates under the influence of liquidity and sentiment. Bitcoin seems to be brewing new highs, and the entire market also seems to sense the scent of "alt season". Let’s delve into the current market situation from the perspective of data indicators and discuss whether Bitcoin's dominance might peak and whether "alt season" is approaching.

Macroeconomic Situation

tariff policy changes

The Trump administration has made a dramatic shift in its tariff policy towards China, reducing the high tariff from 145% to 30% and setting a 90-day suspension period. The market reacted positively to this news. However, it is important to note that the global effective tariff rate remains at 17.8%, which is still much higher than the 2.5% when Trump took office.

In the long run, it is unlikely that the tariff rate will return to the low level of 2.5%. The main purpose of the tariff policy is to rebalance the trade relationship with China while satisfying the demands of Trump supporters.

recession risk

Before the tariff suspension, some soft data indicated that the risk of economic recession had risen.

• The ISM Manufacturing Index fell to 48.7 in April, indicating a contraction in the business cycle.
• The University of Michigan Consumer Confidence Index for April is 52.2, well below the long-term average.
• The one-year inflation expectation rose to 6.5% in April.
• The number of layoffs in March reached a new high since the Great Recession.
• Port data from Los Angeles shows a 30% decrease in cargo volume from China.

Despite soft data showing a sluggish economy, hard data still indicates that the economy remains strong. The suspension of tariffs may temporarily alleviate recession concerns, creating a window for rising risk appetite.

crypto market trends

The crypto market is most sensitive to changes in liquidity conditions. The current market seems to expect the following trends:

• The U.S. government's fiscal spending remains high.
• Government and corporate debt face large-scale refinancing.
• Possible tax cuts, regulatory easing, and adjustments to leverage ratios.
• The decline in inflation may create conditions for the Federal Reserve to cut interest rates.

These factors have increased the likelihood of the "alt season". Recently, altcoins and Meme coins have been observed to continue rising, while Bitcoin's dominance rate seems to have peaked.

"alt season" characteristics

Key factors to determine whether to enter the "alt season" include:

1. In the last year of the cycle
2. Bitcoin's dominance is in the range of 65-70%.
3. The monetary policy shifts from quantitative tightening to quantitative easing.
4. The ETH/BTC ratio is rising
5. Retail investor interest and "Meme" coin recovery

The market is currently in the early stages of this process. The ETH/BTC ratio remains at 0.024, the ETH price is 46% lower than its historical high, and the Federal Reserve is still implementing quantitative tightening policies.

Investment Strategy Recommendations

Considering the current market situation, it is recommended to adopt the following investment strategies:

1. Maintain a cautious attitude towards the current price of Bitcoin
2. Reallocate a small amount of profit to higher-risk assets
3. Focus on assets with excellent early performance and emerging hotspots
4. Look for tokens with strong communities/narratives and low circulation.
5. Pay attention to DeFi projects with strong fundamentals and top "blue-chip" Meme coins.

Risk Warning

Investors need to be aware of the following risks:

• Bitcoin needs to break through its historical high to support the overall market trend.
• Summer is usually a period of volatility/consolidation, and a pullback may occur.
• The rise in long-term bond yields may affect valuations.
• The slow progress of stablecoin legislation may become an obstacle to industry development.
• The crypto market faces additional risks such as hacker attacks, hidden leverage, and fraud.

Conclusion

"alt season" does not mean that all altcoins will perform excellently. Asset selection and timing are crucial. While enjoying the market's rise, it is also important to remain vigilant and pay attention to various risks. There may be opportunities in the future to purchase quality assets at discounted prices, while also moderately participating in the current market to capture potential upward space.