Miles Deutscher highlights the reasons why altcoin season hasn’t started yet

Crypto analyst Miles Deutscher has shared his insights into why the much-anticipated altcoin season has yet to materialize, pointing to a shift in speculative capital away from major altcoins and toward on-chain low-cap meme coins. According to Deutscher, platforms like Pump Fun, which allow users to create and trade meme coins easily, have played a central role in diverting capital that would have typically flowed into mid-to-high market cap altcoins.

In his recent post on X, Deutscher explained that historically, when Bitcoin rallies, speculative capital tends to flow into altcoins with mid-to-high market caps, sparking what traders commonly refer to as “altcoin season.” The CMC Altcoin Season Index, which tracks how well altcoins are performing relative to Bitcoin, is currently at just 37, well below the 75% threshold needed to signal an altcoin season.

Deutscher noted that this cycle has deviated from tradition, with traders opting to invest in low-cap on-chain tokens instead of established altcoins. This shift is largely due to the rise of platforms like Pump Fun, which makes it incredibly easy for anyone to create and trade meme coins. This phenomenon has created a speculative frenzy akin to a “casino-like” environment in the crypto space, where early investors and insiders can see significant returns, while latecomers, often retail investors, face heavy losses as these tokens tend to lose most of their value shortly after launch.

In contrast to 2022, when retail losses were largely confined to major altcoins with decent liquidity on centralized exchanges, this time, many retail investors have been caught up in illiquid on-chain meme coins. Deutscher believes this has led to even greater wealth destruction than what was seen in the early 2022 bear market (with the exception of the LUNA collapse). While Bitcoin and some major altcoins are still in a broader bullish trend, the speculative capital flowing into meme coins has stalled the typical altcoin season.

Interestingly, Deutscher did not place blame on platforms like Pump Fun for this trend. Instead, he pointed to restrictive regulations from the U.S. SEC, which have made it difficult for projects to launch in a fair manner through traditional channels. As a result, projects have turned to new models that allow for easier creation and trading of tokens. Deutscher concluded his post with a hopeful note, speculating that things might change if the regulatory environment were to shift, possibly with a different political administration, such as under a potential Trump presidency.

In summary, the lack of an altcoin season can be attributed to the speculative capital being redirected into low-cap meme coins, and the industry’s need to adapt to regulatory challenges by exploring new ways to launch and trade tokens.