Welcome to Venice Whale: Where Tradition Meets Innovation, and Value Reigns Supreme.

This will be the first report of many, with the goal of timely uncovering opportunities and forecasting macro movements. We will learn about cutting-edge technology and gain an edge in this highly competitive crypto market. A report will be released whenever I see the need for it, interesting alpha is available and significant moves can be made.

Since my focus of interest is in microcaps, and thus the altcoin market, the first question I like to pose is:

When Altseason?

The crypto market is known for its cycles, and one of the most exciting times for many investors is Altseason—a period where altcoins (cryptocurrencies other than Bitcoin) experience significant price surges. To understand when Altseason might strike, we must study historical patterns that have repeated themselves over several bull runs.

Let’s break down the playbook that has repeated itself in past bull runs and will likely happen again.

Bitcoin’s Strong Impulse Leads the Charge

The first stage of Altseason begins when Bitcoin makes a decisive move above its previous all-time highs. Historically, Bitcoin leads the market by drawing liquidity and attention from across the investment landscape. When Bitcoin reclaims its highs, the entire market shifts.
In 2017, Bitcoin surged past its previous highs, increasing its dominance initially, before capital rotated into altcoins.

Bitcoin Dominance Drops, Altcoins Shine

After Bitcoin breaks out, Bitcoin Dominance—the percentage of the total crypto market cap that Bitcoin represents—starts to decline. Investors begin taking profits from Bitcoin and seeking higher returns in altcoins, setting the stage for Altseason.
The most dramatic gains in altcoins occur once Bitcoin dominance drops. Smaller, undervalued assets begin to outperform Bitcoin, often seeing rapid price appreciation.

As we see here from the Bitcoin Market Cap Dominance chart is that it’s approaching a significant resistance level of 58%-62%. This combined with the rising wedge pattern signals a possible downward breakout. The RSI is nearing overbought levels, which suggests that the Bitcoin dominance may be due for a pullback. All in all the chart suggests that we are approaching a critical turning point and if it fails to break above the 60% with conviction in the upcoming months, and instead reverses, this could signal the start of the next Altseason.

Altseason Begins: A Period of Exponential Gains

Once Bitcoin dominance drops, altcoins go parabolic. Historically, this is when the market shifts into a frenzy of price increases, with small-cap cryptocurrencies multiplying in value. Investors who position themselves early in quality altcoins typically see outsized returns during this period.

The Altcoin Dominance chart (percentage of the total cryptocurrency market held by altcoins excluding Bitcoin), shows us that the altcoin dominance is currently sitting on a strong support level. This is considered as a critical indicator when considering the potential for an altseason. The RSI shown is ranging near oversold territory, further indicating the altcoin market could be undervalued relative to Bitcoin. The MACD also shows potential for a bullish crossover, which could act as another confirmation and signal for a shift in dominance back toward altcoins. In conclusion this chart hints that we may be nearing one of those parabolic moments for altcoins again

Why Haven’t We Seen Altseason Yet?

Many are asking: Where is Altseason? The answer lies in Bitcoin’s recent lack of momentum. For the past few months, Bitcoin has moved sideways or downward, failing to break above its previous highs. This has delayed the rotation of capital into altcoins, leaving investors impatient and skeptical.
But this sentiment—doubt, impatience, and disbelief—is exactly what market makers exploit. They rely on weak hands selling before the real move happens. Those who remain patient and understand historical cycles will be the ones to capitalize on the next big move.

Bitcoin’s Seasonal Trends

September has historically been a bearish month for Bitcoin, as the saying “sell in May and walk away” still holds true for many investors. However, as we move into October, known as “Uptober”, liquidity tends to return to the market, often leading to significant rallies in Bitcoin and, subsequently, altcoins.

The 2020 Playbook: How Rate Cuts Impacted Bitcoin and the Crypto Market

The year 2020 stands out as one of the most chaotic yet opportunistic periods for the global economy. Faced with the unprecedented global pandemic, the Federal Reserve responded by slashing interest rates with a swiftness rarely seen in history. In March 2020, the Fed made two consecutive rate cuts, totaling a massive 150 basis points (1.5%) within a single month, bringing the federal funds rate to a near-zero range of 0-0.25%. This drastic reduction in rates was designed to flood the financial system with liquidity to avoid a total collapse of markets, businesses, and households.

Bitcoin’s Response: A 460% Surge!

Initially, as markets processed the pandemic’s economic impact, both traditional and crypto markets saw significant sell-offs. However, as the flood of liquidity began to take effect, Bitcoin and other risk assets rebounded dramatically. By the end of 2020, Bitcoin had surged more than 400%, climbing from under $5,000 in March to over $28,000 by December. This price action was a direct response to the capital flooding into the system. With traditional investments yielding lower returns due to near-zero interest rates, investors looked for alternative assets like Bitcoin, which became the go-to store of value amidst fears of currency devaluation.

2021: The Year of Liquidity-Fueled Growth

Throughout 2021, the Federal Reserve maintained its ultra-loose monetary policy, keeping rates at 0-0.25% and continuing its quantitative easing programs, injecting even more capital into the markets. The combination of excess liquidity and the inflationary environment pushed Bitcoin to its all-time high of nearly $69,000 in November 2021. As Bitcoin surged, altcoins followed, with many smaller projects posting 10x or even 100x returns.

Liquidity was the lifeblood of this bull run, and the connection between Fed rate cuts and crypto market rallies became unmistakable.

Fast Forward to 2024: Rate Cuts on the Horizon?

Today on the 18th of September 2024, we see the Federal Reserve once again turning to rate cuts to prevent economic stagnation. In a move reminiscent of March 2020, the Fed has cut interest rates by 50 basis points (0.5%), marking the first reduction since the pandemic era. The question on every crypto investor’s mind is: How will this affect Bitcoin, altcoins, and the broader market?

If the Fed cuts rates in late 2024, we could see a market dynamic similar to 2020-2021. This time, Bitcoin could reclaim its previous highs, setting the stage for a significant rally and another Altseason.

While the 2024 rate cut is more measured compared to the aggressive 150 basis points slashed in 2020, its implications are still significant. Lowering interest rates reduces the cost of borrowing and increases the amount of available liquidity in the system. Historically, this leads to increased risk-taking, as investors look to move capital into higher-yielding assets such as Bitcoin and altcoins.

Why Fall 2024 Could Be Critical

October has traditionally been a bullish month for crypto markets, and with more potential rate cuts on the horizon, we could see renewed liquidity entering the system. Investors who were sitting on the sidelines may begin to allocate capital into riskier assets, including Bitcoin and altcoins.

• Increased Liquidity: Lower interest rates lead to more available capital, which often finds its way into risk assets like cryptocurrencies.
• Institutional Involvement: Institutions are likely to flock to Bitcoin and other crypto assets as a hedge against economic uncertainty.
• Altseason Potential: Once Bitcoin’s dominance drops, altcoins could see massive price increases, mirroring the parabolic gains of 2020-2021.

The Transition into 2025: Will the Bull Run Continue?

If rate cuts materialize as expected in late 2024, we could see a multi-month bull run similar to 2020-2021. Bitcoin will likely lead the charge, but as its price climbs, capital will start rotating into altcoins. This is when Altseason truly begins.

In early 2025, we expect to see smaller-cap cryptocurrencies outperform Bitcoin, as investors seek even higher returns. The key to navigating this market is to position yourself early and avoid getting caught in speculative frenzies. Strategic investments in utility-driven altcoins could yield life-changing returns during this period.

Until next time, we’ll dive deeper into timing the length of the bull run and which narratives will drive the next wave of growth.