In a recent thread on social media platform X (formerly known as Twitter), Matt Hougan, the Chief Investment Officer at Bitwise Asset Management, shared his thoughts on the current state of the cryptocurrency market, focusing on the interplay between Bitcoin, alt coins, and the impact of US-listed spot Bitcoin Exchange-Traded Funds (ETFs).

Before joining Bitwise, Hougan was the CEO of, a leading provider of ETF news, data, and analysis. His background in traditional finance and his expertise in ETFs have informed his approach to the crypto industry and his efforts to bridge the gap between traditional finance and digital assets.

Hougan suggests that the primary driver of the current “alt season” – a period characterized by the outperformance of alternative cryptocurrencies (alt coins) relative to Bitcoin – is a classic “wealth effect.” He explains that as crypto natives make money from their Bitcoin investments and feel wealthy, they tend to look for more speculative assets, such as alt coins, to invest in. Hougan compares this behavior to the traditional fiat economy, where investors who have profited from large-cap stocks often rotate into small-cap stocks, venture capital, or even increase their trips to Las Vegas.

According to Hougan, the catalyst for alt season is not necessarily the percentage return of Bitcoin but rather the cumulative size of the wealth effect. He points out that since the November 2022 lows, Bitcoin’s market cap has grown by an impressive $1 trillion, which is a significant amount of money compared to the wealth generated by Bitcoin rallies at similar stages in previous market cycles.

A key point in Hougan’s thread is that “wealthy crypto investors are starting to take some of their bitcoin wealth and move it into alt coins. Given that many of these coins are relatively small in size, it does not take much money to significantly increase the price.” He also highlights that the technological infrastructure for alt coins has improved significantly compared to past cycles, with advancements like the upcoming Dencun upgrade on Ethereum and the rise of Layer 2 solutions making non-monetary or tangentially-monetary uses of public blockchains more compelling.

Hougan suggests that the combination of the historically large wealth effect and better technological infrastructure has resulted in the strong alt coin rally we are currently witnessing. However, he argues that this does not necessarily indicate an early end to either the bull market or alt season. According to Hougan, the 2024 bull market is distinct from previous ones due to the influx of new, non-crypto-native money entering the ecosystem through spot Bitcoin ETFs.

Hougan proposes that as long as the inflow of new money via these ETFs exceeds the outflow of old money into alt coins, the wealth effect can persist, contributing to an ongoing bull market. He suggests that this dynamic could lead to more of an “everything season” rather than a classic “alt season,” with both Bitcoin and alt coins experiencing growth.

Despite the overall optimism, Hougan cautions investors to be careful, as bull markets can often lead to the funding of subpar projects, some of which may already be trading at unsustainable valuations. While he acknowledges that there are undoubtedly some great projects in the space, he warns that not every appreciating asset necessarily deserves its rising value.

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