185. This Altcoin Season Is Different, Don’t F*ck It Up

There are five actual valid reasons why this altcoin season won't be the same.

Things don't always play out the same way.

He's stealing attention away from other coins. So now you've got millions of coins vying for investors capital and at the moment there's very little investors in the space. In a bull market, fundamentals go guess what? Out like a window. No one gives a flying behoozer who cares about fundamentals.

First, coin deployment is very, very easy to do nowadays.

Huge supply, low demand equals price not go up. Narrative will remain one of the most important factors in the next Altcoin Season.

Welcome back to another episode of the benneber Podcast. I'm Ben, your favorite high school dropout and founder of Collective Shift. Alongside me as Bergs, your favorite MBA and CEO Collective Shift. Join us as we bring you world class crypto research and strategies to help you dominate this crypto bull market as well as behind the scenes view of us going the best crypto research company here in Australia. If you like the podcast, we'd love for you to leave us a review, share it with a friend or leave us a subscribe if you're on YouTube. It's how we grow the podcast each and every week. And today Bergs, we've got a cracking, cracking research piece one of our analysts have done on altcoin season and altcoins will go up, but more importantly, why we think this altcoin season will be different and not all altcoins are going to go up and we're going to talk through some of the reasons why you've got to be so select with your altcoin positions this year or this cycle because there's a number of different things that have changed compared to previous cycles that you need to be aware of. So if you're holding a bunch of altcoins, especially if you bought them in the last two cycles, this is an episode you need to listen to.

I'm looking forward to this one. Everyone's calling alt season meme coin season. But again, things don't always play out the same way. It's going to be different. It's very nuanced.

And mate, let's get into it, let's crack into it. So as we all know or in the past, the tide that lifts all boats is one that like you know, is something that has been discussed where basically as the market goes up, everything goes up and there's a general assumption that that just happens. That's what's called altcoin season and Usually it's a, you know, a period of one to four months where, you know, altcoins generally way outperform bitcoin. And there's some data that's been done by Pantera Capital, but which basically shows the different phases between phase one and phase two. Phase one is when bitcoin has majority of the growth of the market and then phase two is when altcoin season goes. Now this is basically happened in every cycle. All altcoins go up, regardless of fundamentals or any sort of metrics. It's just the reality is that crypto.

Just goes up and we know what this looks like. Yeah, so this is everyone has their crypto portfolio on their phone. All your tradies, all your mates are talking about it. You go out to dinner, everyone's talking about the latest coin they made 50% on and your Uber drivers trying to sell you a coin in his latest project. Literally everyone's talking crypto, they're reporting it on the news. Everyone knows what this euphoria is like.

Everyone knows and it's about a massive top signal. But anyway, we believe there are a few valid reasons, five actual valid reasons why this altcoin season won't be the same Bergs. And these are some really interesting points I think we all need to take into account. So first of all, number one is the quantity of altcoins at the moment and an absolute minimum that have made it onto coingecko. So this is just listed coins. There is 15,000 cryptocurrencies if you go to Gecko Terminal, which looks at a broader range, which tracks things on chain burgs. 3.5 million coins, are you kidding me? 3.5 million coins. That is an estimated 5x5 times 500% more tokens launched during May this year than during the 2021 bull market. That is nuts. And that's only counting the Ethereum mainnet. So there's a chart here that basically shows us new tokens by blockchain. And this thing is like bloody Elon musk rocket. It is like nothing up until May and then it's just absolutely astronomical growth of new coins. And this is really factoring in a lot of stuff that's happened on Layer two, Solana and other blockchains. So there is literally millions of altcoins this cycle round. Right.

Coin deployment is very, very easy to do nowadays. Ben, you and I can do it. It's very simple. It's kind of self serve. I even remember in like 2021 I was in a discord and One guy was creating a, he created a smart contract just to see what would happen and created two different coins. One was like Cobra, one was Mongo, something like that, put it on, executed the contract, ended up doing, giving us some liquidity and you just see bots attack it and all the things that actually happen and there's a huge spike and then nothing. And this is people just like experimenting, trying to get the next dogecoin or the next meme and market it. And it is so simple to do now. It's like a bunch of clicks and in five minutes you're done.

Yeah. And for those that are a little bit more serious, like they're genuinely launching marketing campaigns, they're trying to get attention and this is what's going on. It is stealing attention away from other coins. So now you've got millions of coins vying for investors capital and at the moment there's very little investors in the space. So huge supply, low demand equals price not go up. Right. Number one. Number two, meme coins are stealing attention. So the growth of tokens launched really has had a big correlation with the meme coin mania that we've seen in the last year or so. And this is certainly being stealing mindshare from what we traditionally know as altcoins. So last month pump fun hit 2 million tokens launched, which is nuts. Now in the launch of Pumped on fund, obviously, like Berj just said, super easy to launch a token. And it's obviously why it's been one of the fastest growing crypto apps reaching $100 million in fees. But it is nuts how quickly these coins can be started up. And there's so much mania that everyone's trying to find their next like sub 5 million dollar market cap meme coinburgs that everyone's just pumping their money into all sorts of random shit.

That's a big thing that you hear. It's like, oh, it's only like a million dollar market cap. Get in early, there's this coin and really think about what's behind it. Are there like people planning to do things? You know, is it some kid that just launched it because he clicked a couple of buttons and it cost him $5 on Solana. You know, at least when you're launching them on like you know, Ethereum and other chains, it cost money. You would need liquid another side, you know, can that be done a lot cheaper? What does this actually mean?

There's been a lot more meme coins, you know, join the top 100 as well. Like a lot more Capital's been flowed into meme coins which we haven't had in previous cycles. So yeah, be aware of that now. Number three token unlocks. So this has been a really big one as there's been a huge increase of sell pressure added to the market based on these liquid tokens where VCs have unlocked early tokens. So never before have we seen so many altcoins added and unlock supply in enduring a market cycle. So for example, In September alone $2 billion worth of tokens were unlocked. In October $4 billion of tokens to be unlocked. So obviously not all these tokens unlocked will be sold straight away, but a significant portion is being pushed straight to ongoing sell pressure in the market Bergs which is obviously pushing price down as you get these huge increases of supply. Now these token unlocks are going to go well into 2025 and potentially going to impact altcoin season as we see so many more net sellers in the market and it could see us, you know, obviously see more sell offs which could push us down, you know, even further as until we get that, you know, new demand. So with so many new coins, so many new token unlocks as the market caps are bigger, it's going to take us a lot more demand to meet that sell pressure for the price just to stabilize, let alone grow.

That's exactly right. And when you push a supply curve, you know, out price kind of comes down. Right. Then you increase supply and if demand doesn't meet that supply, there's excess supply. So price comes down. Yeah, and this is something that our analysts focus on quite heavily. Those future unlocks that people don't tend to look at. And it's like what was a 30% unlock coming out that's going to flood the market. People want their money back that they've either put into this project or time that they're putting in case of the founders or staff and they'll need a liquidity event. Guess what, you're the liquidity. And if that dumps on the market, you need to be aware of how much is actually coming out and do a quick calculation on how that's going.

To impact price 100% and that's, that's you need to be aware of that especially for your token because if you're buying into that as well, like you as Berg said, you're literally the exit liquidity. Now the other bit maturing industry and market. So we've come obviously a long way since the 2017 ICO days where bergs and I lost way too much eth. And makes me sick to think how much pumped in absolute garbage or 2021 when I also pumped a bunch into NFTs and also come out with net nothing. Now the market's come a long way since then. These crypto projects are starting to launch actual products, attain actual users and generate genuine revenue.

As we exit these hype and hope phases, fundamentals start to display some of these more fair prices. And if a cryptocurrency governs a declining revenue platform and shows little adoption, price is probably not going to rally. So fundamentals are coming to the forefront now. We're also seeing that cryptocurrencies have strong fundamental, sorry, strong on chain fundamentals coupled with narratives and especially on the infrastructure level, these are being shared by some of the largest VCs. So, you know, go back in 2017, there was not a lot of VCs around. Right now big VCs are looking for these on chain fundamental projects and they're looking for the best, the best entry points. So these VCs are usually the ones that have the best entries, which we used to have as retail investors. Now we don't. There's a quote here by Pantera Capital Blockchain founder, I think it was here. It is important that as investors we do not fall prey to the same trap and paint everything with one broad stroke. We believe tokens with strong fundamentals and growth prospects will outperform as dispersion increases. Our thesis is that tokens underlying protocols. Sorry, yeah. Our thesis is that tokens underlying protocols that have product market fit and are generating real revenues with strong unit economics will perform best in the cycle. So there is this shift towards strong fundamentals. But Again Bergs, these VCs are the ones that get access to the cheap prices.

It's all like what he just said there is like word salad and actually generating revenues on chair, not on chain. No one really gives a shit about that unless those revenues are coming back in some form. It's more about. Yeah, okay. Revenues through use. Yeah, fair enough. But if people are using it, they'll talk about it, they'll market it, they'll build on it, additional products will be there, it generates demand. And you can even create like a cult like following where you get a lot of advocates and promoters. That's what really pumps token price. Yeah, once you have a real product, you get different measurements. If you're trying to find product market fit, it's a lot easier.

And the reality is to get a.

Higher valuation or measurement, like the hope of what Might be when they actually deliver it's like crap, that's nothing.

And these guys just want good narratives, right? Because they buy an end early, they get it to market, they pump it into retail and then they just sell into them.

Like yeah, they need to, they're value extractors. They need to be seen like they're creating some good in the world. Their job is to get a return on their money. If they kill that company along the way, so be it. It does not matter. It's not like, oh we're going to save your company and maybe you could get to this valuation, whatever. No, I need to hit my 4 or 5x, whatever my target is and I'm out. So the better the terms I have, I will spin any story that seems good to the public so more people like it, more people will buy it and I will hit my numbers and I will get my bonus and people will think I'm amazing.

The life of a corporate.

That's it, that's vc. Vc. That's the game.

There was one here that I wanted to add as the fifth one and that was on the research piece around higher cost of living and rate heights. So. So rate heights. So it's hard not to notice the higher living costs and lower discretionary income. I think we can all feel that, you know, especially in Australia here given the interest rates have been so high it creates a lower risk appetite. So people just don't have a lot of, you know. Yeah, pent up capital discretionary spending. But back in 2021 interest rates were literally zero and like everyone just had a bunch of money. We're just pumping it into speculative assets like crypto. We don't have this this time around and they had stimulus money as well pumping it in there. So it was just like it was just completely nuts.

Yeah, the stimmies.

I love stimmy. So this one around like we talked a lot about rate rise decreases as a catalyst for the cycle. But how low will they go? You know, we don't really know but I don't think we're going to get back to the 2021 levels. Like I think it's slowly going to come down but I think still it's going to take some time for people to get money back into Banksberg. So like we don't have that crazy discretionary spending like we did in previous cycles.

Yeah, we do. Like capital's not as cheap so we don't have as much liquidity that people can put in. And I think the general outlook on things is Worse than it was in 2021. Like how much things are costing. We've hit inflation, but that can also spur it on. Where people want to make or need to make a lot of money faster. And the stock market or bonds or whatever is just not all property is not doing it for them. This could be a good opportunity.

You've also got the burn factor up there, Ben.

Yeah, that's another. That's another piece around. Like, you know how much money people have lost. Yeah. During the calamity of shit show errors that, you know. And we're not even errors like straight fraud. That happened ftx. Yeah, yeah.

Cel Celsius, three hours capital Terra Luna.

Like, you know, crypto scams. Even In Australia alone, 2023, $171 million was lost in scams. Like, you know, how much of an impact has that on investors that go, no, this I'm getting. I'm not doing crypto. Like, you know, I've already lost so much.

Isn't it interesting where just what you said there, you that factor of retail's been scammed. We've all been scammed. You've been scammed, I've been scammed.

And also higher cost of living. So this is a real opportunity for people that have money because they can afford it, they can get in. And you're essentially getting in earlier and making it harder for retail and people that don't have money, which is driven through government policy, which is influenced by businesses and the people that have the money.

It's an interesting point you make, because people that don't have the money, that have been burned, that are scared, they're not pumping it in. Right. But they will when the market rallies and they're like, shit, I'm missing out again.

Yeah. Or if you're an investor and you understand this and you understand market dynamics and you can project out to the future and understand crypto's place in investing in markets and just in terms of.

You know, custody and money, like those factors that, that go in as well as, you know, economics of governments printing a lot of money. When you line up all those things and you spent the time there, you do see the opportunity. But that is a very rare person that has been in the space for a while or has been investing for a while.

And speaking of investing for a while, the devil's advocate here that Nick, our research analyst has put in, I love. Right. Because the reality of all of this is maybe, and I think I agree with this, in a bull market, fundamentals go, guess what? Out the fucking window. No one gives a flying for who's a. Who cares about fundamentals? Bergs. Narrative. Narrative, Narrative. There is a legitimate argument here and a lot of truth in the fact that narrative will remain one of the most important factors in the next altcoin season. And that idea of this time might be different is such a dangerous sentence. People were doing the exact same thing before last bull run in 2021, which showed a huge rally across all crypto tokens, even those that were essentially dead. So it's fascinating. I think you've got to position yourself in the assets that have quality fundamentals, that have potential for narrative and not just positioning dead coins, hoping for a narrative. I think that's the play exactly right.

It needs to be a. You don't want, you don't really want a resurrection. You want a newer narrative that brings newer people in and has that hope of a better future. And that is what is going to spur people on, to drive that price.

Yeah, bang on. So I want to leave everyone with the recap here because this was an absolute mic drop of a finish I felt from Nick. It's important to understand that not all, not all previous altcoin seasons will be the same. And we should be prepared for a case where not all conversations, not all altcoins rally. And I do agree with that because there's so many. A combination of large token unlocks, record tokens in circulation, and a focus on fundamentals could mean the end of previous altcoin seasons like we know it, where the rise, like the rising tide lifts all boats. Right. But it isn't to say only fundamentals will win out. And I suspect narrative will continue to dominate this immature altcoin market. I still expect altcoins to celebrate an altcoin season, but I suspect a serious percentage of them will won't be invited to the party.

Oh, what a legend. What an absolute legend.

So there you have it folks. Yes, I do believe altcoin season will be here at some stage. No, I do not believe all will perform the same. In fact, I think a lot will underperform. I think yes, they will go up to some extent, but probably nowhere near all time highs, previous all time highs. And I think some of the, the, the newer narratives with the fundamentals will way outperform. So you need to be super selective on what you have in your portfolio because this cycle I do believe will be different to last.

I agree. And I think one thing that will be the same is it will still.

Be face melting, oh, 100% 100% face melting. And we're here to help you on the way. So if you need some help with the AL research and you want to know some of these token unlocks, you want to know what we're bullish on, what we're bearish on, it's what we're focusing day in, day out. Have been for four years. It's our fourth birthday this month, folks. Four years doing this. We absolutely love doing the research and actually giving you some quality, genuine, independent help to make sure you crush this bull market. So in our platform, we literally have the shift list. We can see what we like, what we don't like. You can ask us questions, join our live sessions, do strategy sessions with me, market session with the guys, join our community. You know, come and talk to Bergs and I and the team. We'd love to help you out and really absolutely crush this bull market. So if you want to know more about what we do, you can book a free strategy session in the Description below. It's 30 minutes, no obligation. Just have a chat with one of our team, see if it's a good fit, see what your goals are and see how we can help. We'd love to absolutely nail this bull market with you. So that is it from us. Thank you, Bergs.

Thanks champions. And thank you, Ben.

We'll see you on the next episode. Thanks, guys.

See ya.