IOSG Weekly Report: Some Thoughts on This Cycle's Altcoin Season

Chainfeeds Guide:

The kind of broad, months-long bull market like the “flood irrigation” of 2021 no longer exists due to changes in the macro environment and market structure. This does not mean that an altcoin season will definitely not arrive, but it is more likely to unfold in a slow bull market pattern, with more pronounced differentiation.

Source:

Author:

IOSG Ventures

Opinion:

IOSG Ventures: Over the past four years, the structure of the crypto market has changed significantly. First is the rapid expansion on the token supply side. The wealth effect of 2021 attracted massive capital, the boom in venture capital pushed up average project valuations, and the viral spread of airdrop economics and memecoins greatly accelerated the pace of token issuance. Unlike the high circulation in 2021, most mainstream projects now face severe token unlock pressure. According to TokenUnlocks data, more than $200 billions worth of tokens will be unlocked in 2024-2025, which is the root cause of the “high FDV, low circulation” phenomenon. Meanwhile, attention and liquidity have also become fragmented. Kaito data shows that among the top twenty pre-TGE projects, at least ten sectors are involved, with narratives too fragmented to be summarized by just a few words like DeFi, NFT, or GameFi as in 2021. This fragmentation causes capital to switch rapidly between sectors, making it difficult to form synergy and for the market to broaden. More importantly, the ETF funds driving BTC and ETH upward will not flow into altcoins, while retail investors, trapped and lacking liquidity, make it hard for an altcoin season to occur naturally as before. The 2021 market was supported by certain fundamentals. DeFi solved the long-standing lack of on-chain applications, NFTs combined creator and celebrity effects to attract attention from outside the circle, bringing in new users. But four years later, although infrastructure has been overbuilt, truly breakout applications are few and far between. The market has grown, and participants are more pragmatic, no longer easily driven by narratives; both users and capital now expect real growth and sustainable business models. The lack of continuous inflow of new blood, coupled with the ongoing expansion of token supply, has led the market into a zero-sum game and internal competition. The foundation for broad-based rallies no longer exists, and it is harder for investors to form unified expectations amid narrative fatigue. Altcoin season will still come, but it will never again be the kind of nationwide carnival with widespread capital spillover seen in 2021. The current environment ensures that the characteristics of altcoin season will be more structured: capital will circulate among a few fundamentally strong projects and local ecosystems, rather than driving the entire market up in sync. Looking ahead, the pattern of altcoin season will be more diversified. First, projects with strong fundamentals will be favored by capital, such as DeFi blue chips like Uniswap and Aave, as well as rising stars like Ethena, Hyperliquid, and Pendle, which have stable cash flow and real PMF, serving as safe havens amid market uncertainty. Second, there will still be Beta opportunities for strong assets; when ETH rallies, proxy assets like UNI, ETHFI, and ENS will amplify its volatility. Third, old sectors may be repriced due to mainstream adoption. If the stablecoin market grows to $1 trillion, some funds will flow into DeFi, driving blue chip revaluation. Fourth, the wealth effect of local ecosystems cannot be ignored; for example, HyperEVM, with its heat, user base, and capital aggregation, may bring Alpha for weeks or even months. Finally, star projects like pump.fun will also experience periods of valuation divergence; if fundamentals remain strong after sentiment fades, they may still rebound. As the leader in the meme sector, it combines revenue and buyback support and is expected to outperform most top meme coins in the medium term. These scenarios constitute a more differentiated pattern for the future altcoin season.