Altcoin Season Soon? Kaiko Report Reveals Future Altseasons May Be More Concentrated

A new report from blockchain research firms Kaiko Research and Blockhead Research Network (BRN), has suggested an altcoin rally could be on the horizon — but it will be different to altseasons past. 

The report published March 31 forecasts that unlike previous altseasons, which saw broad rallies across the altcoin market, the next altseason may be limited to just a handful of coins that check all the regulatory, liquidity and utility boxes.

Instead of a broad rally, the altcoin rally seems to be concentrated in only a few assets, particularly when it comes to institutional demand.

Kaiko Research and Blockhead Research Network Report

The firms’ prediction is based largely on the performance of altcoins following the 2024 US presidential election, in which many altcoins remained well below their 2021-22 prices while Bitcoin soared to new all-time highs. A few altcoins bucked this trend though, with large-cap alts like XRP and Solana (SOL) and smaller US-based alts such as Hedera (HBAR) and Avalanche (AVAX) performing remarkably well.

The report also points to macroeconomic headwinds and extreme policy uncertainty in the US as factors preventing investors from following the usual practice of rotating profits out of Bitcoin and larger cap alts into smaller alts.

Related: Altseason Cancelled? CryptoQuant CEO Says Most “Won’t Make It”

Altcoin Trading Volume Up, But It’s More Concentrated Than Ever

The report found that “altcoin trade volume has returned to pre-FTX levels, but it is more concentrated than ever.” 

…the top 10 altcoins account for 64% of the total volume, indicating that investors are focusing capital on a select group.

Kaiko Research and Blockhead Research Network Report

It also noted that this concentration “notably accelerated after the U.S. elections”. In the recent post-election rally, trading volume in the top three largest alts accounted for over 50% of total altcoin volume, much higher than the 32% this figure hit in the 2021 bull market.

According to the report, this growing concentration of capital in the higher market cap alts indicates a shift from retail-driven speculation underpinning the altcoin market towards institutional investment, which it says favours a “concentrated set of high-liquidity asset”.

Economic and Policy Uncertainty Killing Enthusiasm for High Risk Alts

The report also identified macroeconomic headwinds, such as higher interest rates and tightened monetary policy, as key causes of investors’ lack of appetite for higher risk, low-cap altcoins.

Rising interest rates have fundamentally altered capital allocation, setting the 2024 rally apart from the liquidity-driven 2021/2022 bull run. Unlike the previous cycle, where central banks expanded balance sheets, today’s tighter monetary policy has made traders more cautious.

Kaiko Research and Blockhead Research Network Report

The report further claimed that extreme levels of policy uncertainty after Trump’s election have heightened investor caution, adding that “in the short term, this favors Bitcoin over altcoins, as investors seek stability in more liquid assets.”

Related: Recession Fear Spreads as Markets Await Trump ‘Liberation Day’; Bitcoin and Alts Trade Higher

While the report is fairly negative about the prospects of most lower-cap alts, it does see reason for positivity when it comes to US-based alts with strong use cases.

Trump has repeatedly flirted with policies like abolishing tax on US-based cryptocurrencies. The report claims this kind of regulatory favouritism, if it emerges, could be a catalyst for serious price growth in US-based alts. It also suggested that alts with strong use cases tied to key narratives, such as real world asset (RWA) tokenisation, DeFi and AI integration could attract new institutional capital, particularly if they also have an ETF to simplify investment.