As Bitcoin’s price surges to new all-time highs above $70,000, a leading crypto analyst is urging investors to be wary of overhyped altcoin projects. 

Matt Hougan, chief investment officer at Bitwise Asset Management, warns that the recent crypto bull run is causing a “wealth effect” that is artificially inflating valuations of many cryptocurrencies.

“Be careful out there. Lots of terrible projects get funded in exuberant bull markets and many are already trading at crazy valuations,” Hougan stated.

1/ Lots of discussion out there about the early start of alts season, and some surprise that it’s happening given bitcoin is “only” up a few hundred percent from the lows.

Some thoughts.

— Matt Hougan (@Matt_Hougan) March 8, 2024

He explains that as Bitcoin investors reap profits, they are reallocating capital into riskier altcoin investments, driving up demand and prices across the broader crypto market. Hougan dubs this phenomenon “alt season.”

“Crypto natives make money in Bitcoin, feel rich, and then look for more speculative assets to invest in,” he said.

However, Hougan cautions that just because an altcoin has seen a price surge, it does not inherently mean the project is fundamentally sound or “deserves” its lofty valuation.

The analyst recommends scrutinizing altcoin valuations closely during bull market frenzies. While Bitcoin’s $1 trillion market cap increase is catalyzing the current alt season, not every token’s price rise is justified.

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