🐬 Waiting for dolphins

When Covid rolled across the world — bringing about lockdowns and meme stocks — we all took the news of swans and dolphins reclaiming Venice canals as a positive sign.

Perhaps the whole ordeal had a silver lining. A moment for the natural world to stretch its wings and humans to reassess their consumption habits.

Sadly, it was fake news. There were no dolphins in Venice canals and global coal output has ramped up after the pandemic. The Earth never really made it any closer to returning to its original state.

Nearly five years later, crypto is currently on the lookout for its own fake dolphin news. A signal that altcoin season will actually return at scale, and massive returns along with it.

Maybe it’s XRP flipping SOL as markets briefly rotate out of AI and memecoins.

“Altcoin season” as a concept has, however, been diluted in the waiting. The definition used here in the Empire newsletter is a conservative one, meant to reserve the label for periods in which returns are both sustained and enormous.

And we’re indeed getting closer.

Altcoin season: When the market cap growth of altcoins — as represented by everything outside of the top 10 — eclipses bitcoin’s since the bottom of the cycle for three months or more.

So, altcoin season can potentially start when the purple line on the chart above surpasses the orange line. As that happens fairly often, altcoin season is only properly confirmed once it has beaten bitcoin for capitalization growth over an extended period — when the altcoin pumps are real enough to retain it all. 

It’s a retrospective model. Running it back gives three distinct altcoin seasons since 2016, and the latest ended when the previous bull run topped out in November 2021, lasting a year and a half. 

That’s now 1,118 days ago, the longest gap by far.

Here’s the good news: The altcoin market just posted its best weekly performance (rolling basis) against bitcoin for this entire cycle, which started in November 2022.

BTC’s market cap shrunk by 0.3% while the altcoin market (minus the top 10) grew by 13.9% — a difference of 14.2%. 

From here, the capitalization of altcoins would only need to rise by around 20% for our first condition to be met, with bitcoin trading sideways.

Sounds like a lot. But the altcoin market has more than doubled in the past five weeks alone.

Crypto is healing.

— David Canellis

P.S. Can you do us a favor? Help us tailor Empire to best fit your interests. Fill out this survey.

• Mid-caps reign supreme: XRP, ENS, ALGO, HBAR, THETA and KAIA are all up more than 50% in the past week.

• Bitcoin dominance fell 5.4% in one month to 56.6%, its lowest since August.

• Tether has net minted around $14 billion in fresh USDT since this time last month. (Current supply: $134.5 billion.)

• Daily pump.fun memecoin volume has dropped by nearly two-thirds from its peak two weeks ago, now under $2.2 billion from $5.9 billion, per Blockworks Research data.

• Hyperliquid’s TVL is at a new all-time high following its billion-dollar airdrop: $1.371 billion, up over 100% in the past month.

⌛ The final countdown

We’re three weeks out from Christmas. 

As David pointed out above, we’re in an interesting spot which leads WisdomTree’s Jason Guthrie to wonder if there’s enough momentum to last till the end of the year.

I personally don’t have a crystal ball, so that’s a little hard to work out as it stands. If you were on an early Thanksgiving break last week, then you may have missed the price levels to watch with bitcoin, but that’s about as far as we can go in trying to predict what’s next. 

So instead, what about how we’re looking at this moment?

“The space, to me right now, does feel reasonably healthy,” Guthrie said. 

“​​There aren't a lot of individual projects or companies that seem to be bolstering or driving this in a very meaningful way. And I think that's very distinctly different from previous cycles where there was a hyped-up innovation, whether it was NFTs or memecoins or something like that, or one big firm like FTX that really seemed to be kind of dominating the narrative … that feels a little shakier than what we've got now, which just seemed like a more diversified groundswell, if you like, through the space more generally. People are building innovative things we don't have … it seems much more use case focused,” he added. 

Though, to be fair, at this point it does seem like memecoins are one of the dominant narratives. How long that lasts is anyone’s game, especially given they’re seen as a pathway in for retail. 

Guthrie’s not sure we’re going to see the same level of retail excitement this cycle as we saw last go around, leading him to think that we might see a bit more of a “muted run. ” That’s not necessarily “an unhealthy thing for the space in any way,” he said.

Instead, this might be the cycle where we see more real adoption, rather than a small crowd of retail with high-net worths putting large portions of that into crypto. 

“I would rather that that demand was coming from tens of millions of people doing something that makes sense for them, rather than a handful of people putting in a very large portion of their portfolio. And I think retail coming back in the future might look much more like a general risk-on sentiment, as opposed to this really loud hype from a relatively small community,” Guthrie said.

Perhaps there’s space for both the retail crowd that wants to dabble in memecoins, and those adding crypto to portfolios as a risk-on investment. 

— Katherine Ross

• Remember Diem? Or perhaps Libra? Facebook’s stablecoin project was a victim of a “political kill,” according to former Coinbase board member David Marcus. 

• Coinbase’s chief policy officer Faryar Shirzad said the US now has the most “pro-crypto Congress” in history.

• Can’t stop, won’t stop: MicroStrategy acquired 15,400 bitcoin for roughly $1.5 billion, the company announced Monday morning. 

• Regulators in New York are leaning toward greenlighting a stablecoin issued by Ripple which could then launch in early December, according to a Fox News report.

• The 20% crypto tax being mulled over in South Korea was postponed for a third time, per a report from ChosunBiz.

Q: Are AI coins just memecoins in disguise?

It feels early to make this call. Or, perhaps, I’m just not ready. 

I genuinely — and sorry for playing both sides here — could see an argument for and against. The momentum right now does make them act like memecoins, which would be the argument for. Not to mention that they intertwine with memes at points, and attract the same crowds. 

However, they’re not memes at the core, which is why I’m not ready to make the call. The shared inertia right now is distracting, but perhaps with some time it’ll become clear. 

— Katherine Ross

The AI chatbot coins are intended to be memecoins with an interactive bent. So, yes.

You can’t say the same for layer-1s like Bittensor and GPU marketplaces like Akash. There’s real utility there, even if we’re still waiting to see if the demand truly scales.

Katherine nailed it with the momentum stuff — I’m watching for a hot ball of money to start rolling between AI tokens, memecoins and older, technologically sound projects still chugging along from past cycles to ring in altcoin season.

— David Canellis