Wen
#altseason?
As highlighted in yesterday's tweet, 'altseason' significantly depends on monetary policy.
Observing Bitcoin's dominance vs. the crypto market, we see Bitcoin's dominance decrease as the Fed shifts monetary policy by cutting interest rates and moving from QT to QE.
Risk assets favor a low interest rate regime. That's why this is a great indicator of when high-risk assets (altcoins) will begin to outperform low-risk ones (like Bitcoin).
There's a certain dependence of 'altseason' on monetary policy.
Here are two examples where monetary policy shifts coincided with ETH/BTC turning around:
- ETH/BTC bottomed as the Fed pivoted and started cutting rates.
- Simultaneously, net liquidity hit its low, shifting from QT to QE, marking the ETH/BTC bottom.
This is a great indicator for when high-risk assets (like Ethereum and altcoins) begin outperforming low-risk ones (like Bitcoin).
Risk assets favor a low interest rate regime.
So, how can you play this?
Rotate from Bitcoin to altcoins when the Fed shifts its monetary policy. There's a 30% chance this could happen in May, and a 72% chance in June. Until then, Bitcoin may be your safest option.
Alts/Ethereum tend to perform better after the halving either way, so this aligns well with any Fed monetary policy shifts.