The dynamics of the crypto market are shifting. According to CryptoQuant CEO Ki Young Ju, stablecoin liquidity now serves as the primary driver for altcoin trading volumes. In a post on X, Young Ju stated, "Alt season is no longer defined by asset rotation from Bitcoin. Stablecoin liquidity better explains the altcoin markets."
Quick Take
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CryptoQuant CEO Ki Young Ju highlights the role of stablecoin liquidity in boosting altcoin trading volumes.
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Unlike previous bull runs, altcoin surges are no longer tied to capital exiting Bitcoin.
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Institutional investors and ETFs contribute to Bitcoin’s rally without fueling altcoins.
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Retail investors remain critical to driving liquidity into altcoins and ushering in altcoin season.
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XRP (XRP) and Solana (SOL) have emerged as standout performers in this bullish market cycle.
Stablecoins’ On-Chain Trading Volume Crosses $1.1T in November
Stablecoins’ trading volume | Source: VisaOnchainAnalytics
The rising on-chain trading volume of stablecoins, which reached $1.17 trillion in November, highlights their growing importance in the crypto ecosystem. Stablecoins like USDT and USDC account for the lion’s share of this liquidity, fueling both Bitcoin and altcoin markets.
Analysts predict that the evolving role of stablecoins could lead to a more stable and diversified crypto market. This transformation underscores the importance of monitoring stablecoin liquidity as a key indicator for altcoin performance.
Altcoin Season: A New Paradigm Unlike Previous Altseasons
Blockchain Center’s Altseason Index | Source: Blockchain Center
Historically, altcoin seasons emerged when investors rotated capital from Bitcoin into alternative cryptocurrencies. However, Young Ju notes that the current bull market is rewriting this narrative. CryptoQuant’s data reveals that while Bitcoin trading volumes are down, stablecoin trading volumes have hit peak levels in 2024, indicating that the liquidity for altcoins is now coming from stablecoin and fiat pairs.
Blockchain Center’s Altseason Index has already crossed the threshold of 75 and surged to 80, indicating that the altcoin season is already underway in the crypto market.
Read more: What Is Altcoin Season, and How to Trade Altcoins?
Institutional Investors Alter Market Dynamics
The delayed arrival of an altcoin season has puzzled many market participants. Young Ju attributes this to the dominance of institutional investors, who have been key drivers of Bitcoin’s recent rally. These entities, often investing through spot ETFs and outside of crypto exchanges, show little interest in altcoins.
“Unlike crypto exchange users, institutional investors and ETF buyers have no intention of rotating their assets from Bitcoin to altcoins,” said Young Ju. This trend underscores the need for fresh liquidity from retail investors to reignite altcoin markets.
Retail Investors Remain Crucial
For altcoins to reach new all-time highs, significant retail-driven liquidity is required. Young Ju emphasizes the necessity for new exchange users and capital inflows to boost altcoin market capitalization, which remains below its previous peaks.
Is Alt Season Here?
Altcoin Season Index Chart | Source: Coinmarketcap
The debate over whether alt season has already begun remains active. Podcaster CryptoVizArt argues that the season has started, citing Solana’s recent rally as evidence. Ripple (XRP) also surged by over 20% in the past 24 hours, briefly overtaking Tether (USDT) in market capitalization.
Similar to Blockchain Center’s analysis, Coinmarketcap’s Altcoin Season Index also suggests that the altcoin season has begun, with its index rising to 83 as of writing.
However, Young Ju and other analysts maintain that alt season is uneven. "Altseason has started for a few major altcoins, but not for others,” he said. Blockchain Center’s Altcoin Season Index, which measures the performance of altcoins against Bitcoin, is approaching its critical threshold of 75%, suggesting that a broader altcoin season may be imminent.
A Look Ahead
While institutional investors may not drive altcoin gains, retail traders could still catalyze a rally. As stablecoin liquidity grows, the conditions for a sustained altcoin season are strengthening. However, for altcoins to thrive, the market will need new entrants and innovative use cases to attract attention.
Stay tuned as KuCoin News continues to cover the latest market trends and their implications for the crypto ecosystem.
