Why we may not see an altcoin season again?

Bitcoin will still dominate, but there is also an opportunity to allocate smaller Positions to alts.

Written by: Blockworks

Compiled by: Tao Zhu, Golden Finance

K33 believes that, unlike meme coins, alts may not make a comeback... at least not in the way we are used to.

David Zimmerman of K33 wrote in a report that the cycle for 2020/2021 may have peaked.

"If there is no new retail capital inflow, it will become increasingly difficult for speculative tokens that have no revenue, no products, and no roadmap other than hype to be profitable," he said.

Apart from the overall maturity cycle we observe, a significant change is that meme coins (memecoin) have truly established themselves in the cryptocurrency space.

In other words: since it is possible to invest in meme coins, why invest in narrative-driven tokens?

As I wrote on Milk Road last week, meme coins accounted for about 25% of the total trading volume of cryptocurrencies during the peak period of the first quarter.

This means that the future path of alts is more likely to be selective. As Zimmerman pointed out, the overall "altcoin market faces $4.3 billion in token unlocks in May, $2.8 billion in June, and $3.2 billion in July. These unlocks are headwinds and require a significant amount of new liquidity to absorb."

"Without any significant surge in demand or new retail inflows, the calculation is simple: more supply facing static or shrinking demand equals downward pressure."

In addition to the obvious demand for liquidity, times have changed. In the past, altcoins could gain a boost just by being close to trending topics. Now, there is a greater need to focus on the fundamentals (I swear I'm not trying to bring this up all the time, it's just what's happening).

Zimmerman stated that Bitcoin will still dominate, but there is also an opportunity to allocate smaller Positions to alts. While some alts may perform exceptionally well, "the window of opportunity is limited and increasingly short."

As cryptocurrencies mature, tokens may not continue to be big winners. Take stablecoins as an example.

"Currently, the most bullish crypto asset besides Bitcoin is almost certainly stablecoins. They are making inroads into payment infrastructure, with a continuously growing market cap, and positioning themselves at the center of retail and institutional use cases," said Zimmerman.

Amidst numerous options, investors must now pay attention to indicators before investing in tokens (unless you are committed to investing in meme coins). For K33, this means understanding product-market fit, user growth, or the token's returns.

A more serious era of cryptocurrency is about to arrive.