• Altcoin season could kick off in November, revealing strong investment opportunities. 
• However, altcoins as an asset class continue to decline.

With election results on the horizon and anticipated shifts in monetary policy, Bitcoin [BTC] is charting a volatile course, drawing traders toward its relative stability. This classic trading move – seeking refuge in Bitcoin during market uncertainty – has driven BTC close to its all-time high of $73K, boosting its market dominance to over 60%.

As Bitcoin holds the spotlight, could this high dominance set the stage for a wave of profit-taking into altcoins, sparking a potential altcoin season?

Post-election cycle might kickstart an altcoin season 

In previous cycles, such as the run-up to Bitcoin’s all-time high of around $73K in March, altcoins saw significant rallies as retail investors diversified their portfolios, driven by optimism and FOMO. However, the current environment appears different.

A recent AMBCrypto report indicates that spikes in short liquidations have significantly influenced Bitcoin’s recent price increases.

While this suggests a short-term bullish outlook, it may also lead to hesitation among investors concerned about the volatility from the derivative market.

This reaction reflects a basic psychological response to uncertainty. If this trend holds, investors might redirect their capital into other high-cap tokens, potentially setting the stage for an altcoin season.

With 100% of Bitcoin cohorts currently in net profit, there’s a strong likelihood that altcoins could experience a surge by mid-November. 

This timeframe may align with the conclusion of the election cycle, leading investors to recalibrate their strategies in response to new market trends.

Put simply, as profit-taking occurs and market sentiment shifts, altcoins could benefit from increased capital flow, potentially igniting an altcoin season.

But there’s a catch

The current optimism, with Ethereum posting a notable weekly surge after underperforming against major rivals in the previous cycle, its resurgence signals a return to earlier market trends.

However, altcoins as a whole are still struggling. While a few tokens may experience breakouts, the broader trend remains clear – altcoins, as an asset class, continue to fade.

As the total market cap has risen from $2T to $2.4T, nearly all new money has flowed into Bitcoin, pulling liquidity away from altcoins, which is evident in the rising Bitcoin dominance.

This indicates that Bitcoin and the rest of the market are increasingly becoming separate worlds. Currently, only 14 altcoins have managed to attract liquidity in the past 90 days.

Additionally, they have been in a brutal downtrend against Bitcoin since early 2022. After nearly four years of underperformance, altcoins have reached levels not seen since February 2021.

Read Bitcoin’s [BTC] Price Prediction 2024-25

Overall, it’s clear that the liquidity dynamics in crypto have shifted significantly. While a few altcoins might be poised for gains during the post-election cycle as Bitcoin holders seek to redistribute profits, the narrative surrounding an altcoin season remains elusive.

This trend suggests that high Bitcoin dominance may no longer serve as a reliable precursor for an altcoin season.