The emergence of an altcoin season typically depends on the performance of Bitcoin. When money exits BTC and flows into altcoins, this sparks a surge in the prices of alternative cryptocurrencies.

However, external factors, such as the recent increase in token generation events (TGEs), can influence this cycle. The rise in TGEs in the last few months has led to the launch of 45 new tokens, many of which have not yielded substantial returns. The failure of these tokens to sustain growth post-listing raises concerns about whether this trend is due to bearish economic conditions or the lack of inherent value in these tokens, which has turned altcoins into speculative assets primarily driven by momentum.

Vincent Liu, the CIO of Kronos Research, highlighted how the relentless launch of tokens, particularly meme coins, has diluted liquidity and fragmented investor attention. Factors like rising interest rates and a global shift towards risk aversion have also dampened speculative capital, causing tokens without utility or sustainable ecosystems to be revalued amidst growing investor doubt.

While some token launches like Solayer (LAYER) have seen successful returns, with an 88% increase since February, the altcoin season has been delayed due to the dominance of Bitcoin and the challenges posed by rapid token launches and subsequent failures.

Liu noted that despite the delay, niche categories like AI-related tokens continue to attract interest, indicating that altcoin season narratives are evolving rather than disappearing. However, the true shift towards an altcoin season would require 75% of the top 50 altcoins to outperform Bitcoin which is not currently the case.

There are concerns raised by Arthur Cheong regarding TGEs, where projects and market makers may collude to artificially inflate token prices, potentially distorting market behavior and eroding investor trust. Liu proposed reforms in token launch practices to address this issue, emphasizing the importance of transparency in partner agreements, listing criteria, and pre-launch disclosures to ensure a sustainable and credible ecosystem.

Collaboration among market makers, centralized exchanges (CEXs), and investors is seen as crucial in combating artificially inflated token prices and promoting long-term value and trust in the cryptocurrency market. Conducting thorough research into new projects’ fundamentals can help investors safeguard against losses and identify valuable tokens in the long term.