Alts season returns in December! Quantitative tightening is over, total market capitalization surges to $1.6 trillion.

Crypto Rover announced on Twitter that quantitative tightening (QT) will end in December, and the altcoin season is about to return. As soon as this news broke, the Crypto Assets community was immediately shaken. He presented a chart depicting the new market landscape changes, and the total market capitalization of Crypto Assets Total3 (which includes only alts) is expected to reach $1.6 trillion.

QT Ends Release of Liquidity Alts Season Starts

(Source: BlockchainCenter)

Crypto Rover claims that QT will end in December, signaling the largest altcoin wave to date is coming. Quantitative tightening can be defined as the actions of central banks reducing their balance sheets, selling, or stopping the reinvestment of bonds, thereby limiting liquidity. Quantitative tightening began in 2022 and has affected all risk assets. The cryptocurrency market typically performs better in a loose or high liquidity environment.

The mechanism of QT has a profound impact on the crypto market. When the Federal Reserve implements QT, it pulls liquidity out of the market, leading to higher funding costs and a decrease in investors' risk appetite. In this environment, funds typically flow into relatively safe crypto assets like Bitcoin, while alts are sold off due to their higher risk characteristics. The crypto bear market from 2022 to 2023 largely coincided with the implementation of QT.

On the contrary, when QT ends or shifts to QE (quantitative easing), market liquidity improves, investor risk appetite increases, and funds begin to rotate from mainstream coins like Bitcoin and Ethereum to alts in search of higher returns. For example, after the cancellation of large-scale quantitative tightening or the introduction of quantitative easing policies, altcoin prices soared. Crypto analysts link the previous altcoin market (such as in 2021) to significant liquidity inflows. During the altcoin season of 2021, many small market capitalization tokens rose 10 times or even 100 times within weeks.

He claims that once liquidity is relaxed, the altcoin season will return. The chart shows that the peak market share of alts reached about 75%, then fell back to around 43%. The chart delineates the boundary: when the market capitalization ratio is above 75%, the altcoin season begins; when the market capitalization ratio is below 43%, the Bitcoin season begins. The current 43% market share indicates that the market is in a Bitcoin-dominated phase, but once the threshold of 75% is breached, it will confirm the full activation of the altcoin season.

If QT stops operating by the end of December 2025, a large amount of capital will flow into the altcoin market. According to past research, excluding Bitcoin and Ethereum, the total market capitalization (Total3) of crypto assets is expected to reach 1.6 trillion USD. This target implies that there is several times the potential for growth from the current level. At that time, investors and developers will no longer focus on Bitcoin, but will turn to smaller market cap tokens, decentralized finance (DeFi), and Layer-1 networks.

Historical data supports the altcoin season discussion

The chart shows that during the period from 2024 to 2025, the market dominance of alts experienced significant fluctuations. It rose from around 80% in 2020 to a peak in 2024, after which the market went through a transitional phase. This fluctuation pattern has repeated several times in the history of the crypto market, usually following a fixed cycle: Bitcoin rises first → Ethereum follows → Large market capitalization alts rotate → Small market capitalization alts explode.

The altcoin season of 2021 is a classic example of a large-scale rotation. At that time, Bitcoin rose from $10,000 in October 2020 to $64,000 in April 2021, and after completing its main bullish wave, it began to consolidate. Capital then flowed to Ethereum, driving ETH from $300 to $4,000. Subsequently, DeFi tokens, Layer-1 public chains, and NFT-related tokens surged in turn, with many alts increasing by 10 to 100 times within months.

Typical Altcoin Season Characteristics in History

Rotation Order: BTC → ETH → Large Market Capitalization Alts → Small Market Capitalization Alts

Price Increase Characteristics: Large market capitalization coins 2-5 times, medium market capitalization coins 5-20 times, small market capitalization coins 20-100 times

Duration: Usually 3-6 months, accompanied by significant fluctuations and rapid rotations.

End Signal: Extreme greed sentiment, surge in new project launches, large influx of retail investors

The Crypto Rover chart (from BlockchainCenter.net) is a widely used altcoin season indicator in the crypto community. This indicator determines whether the market is in a Bitcoin-dominant or altcoin-dominant phase by calculating the performance of the top 50 alts relative to Bitcoin. When the indicator exceeds 75, it means that the gains of the alts significantly surpass those of Bitcoin, with funds rotating from BTC to alts.

Currently, about 43% of the readings indicate that the market is still in a Bitcoin-dominated phase. This means that most of the funds are still concentrated in Bitcoin, while altcoins are performing relatively weakly. However, historical experience shows that this period of sluggishness is often a buildup phase before the altcoin season. When Bitcoin completes its major upward wave and starts to consolidate, profit-taking will look for the next investment opportunity, making the undervaluation of altcoins very attractive.

From the current market structure, Bitcoin has been oscillating in the range of $100,000 to $110,000 for several weeks. This kind of consolidation is often a precursor to capital rotation. If QT indeed ends in December, coupled with Bitcoin's sideways movement, it could trigger a large-scale flow of capital into alts. Crypto Rover's prediction is based on observations of historical patterns and judgments of macro policies. Although it cannot guarantee realization, it provides a scenario worth paying attention to.

1.6 trillion USD Total3 feasibility of the target

According to previous research, excluding Bitcoin and Ethereum, the total market capitalization of Crypto Assets (Total3) is expected to reach $1.6 trillion. This target is the core figure of the altcoin season narrative. Currently, the Total3 market capitalization is approximately $600 to $700 billion (the specific number depends on the prices of Bitcoin and Ethereum), and $1.6 trillion means it needs to double or even more. Such an increase is not uncommon during altcoin seasons.

In the peak season of altcoins in 2021, the market capitalization of Total3 reached approximately 1.2 trillion dollars. Considering the overall expansion of the current Crypto Assets market, the increased participation of institutions, and more traditional funds entering through compliant channels such as ETFs, a target of 1.6 trillion dollars is logically feasible. The key lies in whether the liquidity environment can truly improve and whether investors' risk appetite can significantly increase.

At that time, investors and developers will no longer focus on Bitcoin, but will turn to smaller market capitalization tokens, decentralized finance (DeFi), and Layer-1 networks. This shift in attention is a typical feature of altcoin season. When everyone is discussing a certain emerging DeFi protocol or Layer-1 public chain, it often signifies that the altcoin season has entered its mid to late stage. Social media buzz, Google search trends, and the frequency of new coin listings on exchanges are all leading indicators of altcoin season.

Crypto Rover's chart shows that there is an investment opportunity before a significant rotation in the market occurs. This “opportunity” refers to the current stage where alts are relatively undervalued. Many quality projects' prices are still far below the 2021 peak, while their technological development, user growth, and ecosystem construction have significantly improved compared to that time. This divergence between value and price provides an advantageous risk-reward ratio for early investors.

However, investors must understand that while altcoin season offers high yield opportunities, it also comes with extremely high risks. The liquidity of alts is often poor, and price fluctuations are extremely volatile. A token may rise 300% in one week, only to give back 80% the next week. Furthermore, the altcoin market is rife with fraudulent projects and worthless “air coins,” so investors need to have discernment and strict risk management.

Risk Warning and Rational Investment Advice

Currently, there is no official announcement indicating that QT will definitely cease operations in December. The dominance indicator for altcoins (provided by BlockchainCenter) is still just a reference indicator, not a final decision. Although historical trends align with the theory of Crypto Rover, history cannot determine the future. These warnings are extremely important, and investors should not treat analysts' predictions as certainties.

The end time of QT is determined by the Federal Reserve, and the Fed's policy heavily relies on economic data and inflation trends. If inflation rebounds or the economy overheats, the Federal Reserve may extend QT or even restart interest rate hikes. The minutes from the Federal Reserve's meeting in October 2024 show that officials still have differing views on whether to further cut interest rates in December, and this policy uncertainty may delay the improvement of liquidity.

Even if QT ends as scheduled, it cannot guarantee that the alts season will definitely arrive. The actual market trend is influenced by multiple factors: the price trends of Bitcoin and Ethereum, the allocation preferences of institutional funds, changes in regulatory policies, and overall market sentiment. During the bear market of 2022, the alts season that many investors expected never arrived, and a large amount of capital was trapped while waiting.

The rational approach is to treat the predictions from Crypto Rover as a possible scenario rather than a certainty plan. If you really want to position yourself for the alts season, you should adopt a diversified investment strategy, selecting projects with solid fundamentals, reliable teams, and practical application scenarios. Set strict stop-loss orders and keep the overall position within the range of acceptable losses. Most importantly, avoid chasing highs at the end of the alts season, as that is often the stage with the highest risks.

Are you ready for the return of altcoin season? The answer to this question should be: ready to bear risks, rather than expecting certain returns.