HashKey Capital is a leader in digital assets and blockchain, dedicated to empowering institutions, founders, and talent to drive the blockchain industry’s growth and foster widespread adoption. With Bitcoin flirting with all-time highs, there has been speculation that Altcoin season may be on the horizon. In their latest report, HashKey Capital delves into why they are bullish on altcoins and what factors may contribute to a potential surge in their value.
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Institutional Adoption
First it was ETFs, now it’s stablecoins. As major firms, including PayPal, Citibank and now Stripe, engage with digital assets, it creates rising buying pressure. With this increased institutional adoption, altcoins have the potential to see significant gains in value. Although there aren’t any altcoin ETFs, this increased interest in digital assets as a whole could create positive sentiment towards altcoins, driving up demand and prices.
“Out of the 525 ETFs launched in 2024, 13 of the top 25 are directly linked to either Bitcoin or Ether.”
HashKey Capital Report
Bitcoin was the first cryptocurrency that gained interest from institutions, but with Ethereum’s growing popularity and DeFi on the rise, altcoins are also becoming increasingly attractive to investors. Is Ethereum the second domino to fall for institutional adoption and will other major altcoins begin to follow? This is a possibility that HashKey Capital is considering, and it’s something to keep an eye on.
Macro Tailwinds
Lower interest rates and monetary easing will boost liquidity, benefiting altcoins in an organic way that may even eclipse the post-pandemic boom. Liquidity is essential for altcoins to thrive, and with traditional markets struggling, more investors may turn to digital assets. Some early indications are already visible, as altcoins are beginning to show early signs of a bullish trend.
“Several Altcoins have surpassed their 360-day moving average, a trend typically observed in the early stages of a bull market. This proportion is expected to increase further as bullish conditions return to the broader cryptocurrency market.”
HashKey Capital Report
Risk appetite might not quite be there yet in terms of institutional interest, but with potential gains on the horizon and price patterns showing signs of a shift, it’s only a matter of time before altcoins garner more attention from investors. Retail investors have long been driving the altcoin market and these early indicators may be a signal for institutions to take notice.
Real-World Utility
The convergence of AI, DePIN, and real-world asset tokenization increases demand for altcoins across diverse industries. These real-world use cases will drive demand higher and solve some of the altcoin supply glut. As technology converges with cryptocurrency, new opportunities will arise for altcoins to prove their value and utility.
The rising demand for AI, fueled by OpenAI’s ChatGPT, has heightened the need for storage, computing, and network resources. Centralized AI infrastructure encounters challenges such as high entry barriers and data control issues. Blockchain, with token incentives, provides a solution by enhancing user and community engagement. Bittensor (TAO) leads with its decentralized machine learning platform, while Fetch.ai (FET) excels in optimizing transportation and supply chains with AI and autonomous agents.
Tokenizing traditional assets like real estate and precious metals broadens the applications for altcoins. Notable recent developments include Mantra’s $500M real estate tokenization, BlackRock’s BUIDL fund exceeding $500M, and strategic investments in Securitize and Ironlight. With the solidification of regulations, a growing number of projects offering diverse tokenized securities are anticipated, attracting a broader spectrum of investors.
Decentralized Finance Opens Up Interest For Altcoins
Decentralized Finance has also made improvements and continues to prove itself as a viable alternative to traditional financial systems. EigenLayer ($10.8 billion) and Lido ($23.5 billion) are newer DeFi protocols that have gained significant traction in recent months, showcasing the potential for growth and adoption in this sector. As the ecosystem continues to become more robust, altcoins with strong utility and real-world use cases will likely see a surge in demand and value.
“DeFi has made notable advancements, providing enhanced scalability and clearer use cases. Over various market cycles, DeFi has demonstrated its capacity to attract capital through competitive yield opportunities”
HashKey Capital Report
Altcoins will benefit from this growing interest in DeFi as they are often used as utility and governance tokens within these protocols. Furthermore, DeFi platforms often allow for cross-chain functionality, meaning altcoins on different blockchains can interact with each other, increasing their overall utility and value.
Historical Look at Altcoin Season
In this report by HashKey Capital, the authors also introduced a look at three previous altcoin markets to draw insights on how current market conditions may impact future performance. Sme notable data points to consider is that each season lasted abut 5-14 months.
Key events that led to these seasons included the rise of new tech such as Ethereum and smart contracts, along with the launch of new exchanges that allowed for ICOs to take place easily. FOMO and Bitcoin’s rise also contributes to the altcoin market.
Bitcoin Dominance, which measures Bitcoin’s market cap against the entire cryptocurrency market, showed a downtrend during altcoin seasons. This indicates that investors were seeking out other opportunities outside of Bitcoin.
In the last altcoin season, we have also seen how institutions joining the market made for a more legitimate market. Culture was also a contributing factor as brands such as Bored Ape Yacht Club and CryptoPunks became popular, creating a demand for NFTs.
Final Thoughts
As we approach the peaks of the altcoin season, it’s crucial to stay informed and keep a pulse on the latest developments in the industry. HashKey Capital’s latest report provides valuable insights and analysis on why now is a great time to be bullish on altcoins.
With institutional adoption, macro tailwinds, and real-world utility all contributing to the altcoin market’s growth, it’s clear that this is just the beginning for these digital assets. We highly recommend reading the full report as it contains an in-depth look at the altcoin market and potential investment opportunities.
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