First: The position of Bitcoin (BTC) - the relationship with the macroeconomy
Bitcoin, despite being classified as a high-risk asset, is influenced by macroeconomic factors in two main ways:
1. Institutional Flows and ETF Funds:
• Explanation: The entry of Bitcoin Spot ETFs has allowed major financial institutions and traditional investors to invest in Bitcoin more easily. These flows are currently the strongest fundamental factor supporting the price in the long term, representing a continuous and steady demand.
• Analysis: Bitcoin is increasingly viewed as "digital gold" or a reserve asset against inflation or devaluation of fiat currencies.
2. Central Bank Policies (Interest Rates):
• Explanation: When interest rates rise (from the Federal Reserve and others), investors prefer to hold less risky assets with fixed returns (like bonds). This pulls liquidity from high-risk assets like Bitcoin, creating selling pressure.
• Current Analysis: The expectation that central banks may start lowering interest rates in 2025 enhances the outlook for Bitcoin. However, any signs of delaying this cut increase caution and volatility at present.
3. Halving and the Four-Year Cycle:
• Explanation: The halving event that reduces the Bitcoin mining reward (and thus reduces the new supply) has historically been followed by major price increases.
• Analysis: This factor supports overall optimism, as technical analysts tend to analyze the market position within this cycle, driving them to set high price expectations for the coming months (such as targets $126K - $150K).
Secondly: Alternative Currencies (Altcoins) - Transition to Altseason
The alternative currency market (i.e., all currencies except Bitcoin) has its own dynamics that are first affected by Bitcoin, and then by technical utility factors.
1. Bitcoin Dominance Index (BTC Dominance):
• Explanation: This index measures the market capitalization of Bitcoin as a percentage of the total market capitalization of the crypto market. When it rises, it means liquidity is flowing into Bitcoin. When it falls, it means investors are taking their profits from Bitcoin and converting them into other alternative currencies, which is known as Altseason.
• Analysis: Technical signals indicate that Bitcoin dominance faces resistance and may start to decline, which explains the expectation for the beginning of a growth phase for alternative currencies.
2. Quality and Actual Utility (Utility-Driven Altseason):
• Explanation: In previous market cycles, all alternative currencies rose randomly. Now, the analysis focuses on the fact that the rise will be selective.
• Analysis: Institutions and investors have become more mature. Investment will focus on projects that:
• Provides real technical solutions (such as Ethereum as a platform for smart contracts).
• Solves Bitcoin's problems (such as second layers that increase BTC transaction speed).
• Aligns with major technological narratives (such as artificial intelligence and DePIN).
3. Liquidity Risks vs. Growth Potential:
• Explanation: Smaller alternative currencies have much lower liquidity than Bitcoin and Ethereum. This allows for very quick and large gains (which can reach 1000% or more), but it also means that any large sell-off can lead to a rapid and sudden collapse in price.
• Analysis: This is why analysts warn that alternative currencies are for "high risk" and only a small portion of the portfolio should be allocated to them.
