Is there still a cryptocurrency copycat season?
Yes, I believe that counterfeiting will inevitably appear.But when it will appear, it should be directly related to liquidity.
However, the emergence of the copycat season is often accompanied by the rise in liquidity. From the figure, we can see that if ETH is the largest altcoin, it matches the liquidity of the United States very high. However, when liquidity increases, it will first be transmitted to large-scale assets, such as S&P 500, and then to medium-scale assets, such as $Bitcoin, and finally to copycat assets, such as $ETH.
Therefore, we can also see that when liquidity is missing, large-scale assets will be affected the least, while small and medium-sized assets will be affected more. That is, ETH is a cryptocurrency second only to BTC, so the data shows that it can be closer. If it is replaced with other altcoins, the changes affected by liquidity will be even stronger.
That is, when liquidity is at its peak, it will rise more fiercely, and when liquidity is at its low point, it will fall very fiercely. Therefore, when the liquidity has not increased significantly, the copycat season may indeed appear lower. In fact, altcoins are like Russell 2000 in the US stock market.
In the figure, we can see that Russell 2000 is very severely affected by liquidity. Even if it breaks through the trend of liquidity rising in a short period of time, it is very easy to fall sharply. In fact, this is very different from the main assets with "external forces". For example, the AI industry in the US stock market is in the hot spot, so a large amount of funds have entered, and when liquidity is poor, it will naturally "draw blood" from small-cap stocks.
Cryptocurrencies are also the same, but the difference is that BTC has stimulated the on- and off-market liquidity buying of BTC, but because the overall liquidity has not improved, it is equivalent to drawing blood from other assets.
From the comparative chart, the trends of the two sides are very similar. They are both affected by US liquidity, especially when liquidity is insufficient. The rise may be pretty good. However, once there is a decline, non-quality assets are cleared first, and it is the turn to buy at the bottom in the end. Therefore, it means that S&P 500 and BTC often fall the least and rise the fastest in market fluctuations.
Back to the end, it is true that the copycat season will appear, but the emergence of the copycat season will inevitably be a rebound in liquidity. From the current perspective, on the one hand, the monetary policy needs to continue to move towards easing and enhance investors' risk preferences. On the other hand, there is direct liquidity stimulation to increase funds in the market, such as stopping balance sheet shrinkage, canceling SLR or QE.
So if there is no liquidity injection, the situation of altcoins will at most be a short-term surge and plummeting, and it is difficult to last longer to form a copycat season.
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