Key Points
- Altcoin season hasn’t started due to speculative capital moving from major altcoins to low-cap meme coins.
- Miles Deutscher identifies the rise of on-chain meme coin creating platforms, like Pump Fun, as the main factor.
Crypto expert Miles Deutscher has provided a reason as to why the expected altcoin season hasn’t begun. He indicates that speculative capital, which usually flows into major altcoins, has been redirected towards low-cap meme coins.
Altcoin Season Delayed
Deutscher shared his thoughts on X, singling out the emergence of platforms like Pump Fun, which enable easy creation of on-chain meme coins, as the primary cause for this shift in capital.
Typically, when Bitcoin rallies, speculative capital is invested in mid-to-high market cap altcoins, triggering what is known as the “alt season”. The CMC Altcoin Season Index measures this, with an alt season being declared when 75% of the top 100 coins (excluding stablecoins and asset-backed tokens) outperform Bitcoin over a 90-day period. The index currently stands at 37.
Shift in Investment Trends
However, Deutscher posits that this cycle has been different. Instead of investing in top altcoins, traders have opted for fast-moving low-cap on-chain tokens. He comments, “The reason we’ve seen no major ‘alt season’ across majors is because the speculative capital that would’ve once poured into top 200 assets instead decided to jump the gun and flood into on-chain low caps.”
Platforms like Pump Fun enable users to launch and trade meme coins instantly, creating a highly speculative environment. This often results in significant gains for early adopters and insiders, while latecomers, usually retail investors, can suffer heavy losses as these tokens often lose most of their value shortly after launch.
Deutscher notes that in contrast to 2022, when most retail losses were confined to major altcoins traded on exchanges with good liquidity, this time, investors have been caught in illiquid on-chain meme coins. He describes this as a wealth destruction event greater than the early 2022 bear market, despite Bitcoin and some major coins still being in a macro bull trend.
Interestingly, Deutscher doesn’t place the blame on platforms like Pump Fun. He suggests that restrictive SEC regulations have made it difficult for projects to launch fairly through traditional methods, pushing the industry towards new models. His post ends with a speculation that this might change under a different administration.