The cryptocurrency market is showing potential signs of an impending altcoin season. Market watchers cite a confluence of technical, sentiment, and macroeconomic factors that could lead to a significant rally in altcoins.

The outlook follows a notable downturn in the altcoin market, which has dropped about 37.6% since its high in early December 2024. As of the latest data, the market cap stands at $1.1 trillion.

Is Altcoin Season Coming? 

From a technical perspective, Bitcoin (BTC) Dominance, which measures Bitcoin’s market share relative to the total cryptocurrency market, seems to be at a key turning point. 

A recent chart shared by crypto analyst Mister Crypto on X highlighted that Bitcoin Dominance has reached a resistance following a rising wedge pattern. This pattern is generally seen as a bearish signal, often leading to sharp pullbacks.

“Bitcoin Dominance will collapse. Altseason will come. We will all get rich this year!” he wrote.

In addition, another analyst corroborated these findings, noting that Bitcoin Dominance has reached a peak. Thus, he forecasted a subsequent downturn. 

However, the Altcoin Season Index has dropped to a low of 16. The index, which analyzes the performance of the top 50 altcoins against Bitcoin, indicated that altcoins are currently underperforming.

Notably, this level mirrors the bottom for altcoins observed around August 2024. This period preceded a significant altcoin rally, and the index peaked at 88 by December 2024.

Lastly, from a macroeconomic perspective, the 90-day delay in President Donald Trump’s tariff implementation has renewed market confidence. This delay is perceived as a positive signal, potentially encouraging capital inflows into altcoins.

“90 days tariff pause = 90 days of altseason,” an analyst claimed.

Moreover, analyst Crypto Rover pointed to quantitative easing (QE) as a catalyst for an altseason. According to him, when the central bank starts pumping money into the economy (through QE), altcoins could experience a significant price surge, benefiting from the increased liquidity and investor optimism.

“Once QE starts. Altcoin season will make a massive comeback!” he stated.

However, in the latest report, Kaiko Research stressed that a traditional altcoin season may no longer be feasible. Instead, any potential rally could be selective, with only a few altcoins experiencing significant upside. The focus will likely be on assets with real-world use cases, strong liquidity, and revenue-generating potential.

“Altseasons may become a thing of the past, necessitating a more nuanced categorization beyond just ‘altcoins,’ as correlations in returns, growth factors, and liquidity among crypto assets are diverging significantly over time,” the report read.

Kaiko Research noted that the growing concentration of liquidity in a few altcoins and Bitcoin may disrupt the typical capital flow into altcoins during market upswings. Furthermore, as Bitcoin becomes more widely adopted as a reserve asset by institutions and governments, its position in the market strengthens further.

Ultimately, while the signs point to a potential altcoin rally, it’s clear that the future of altcoins could involve more nuanced market dynamics.

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The on-chain analytics firm Santiment has revealed how the majority of the altcoins are currently in what has historically been a buy zone.

Mid-Term Trading Returns Are Extremely Negative For Most Altcoins

In a new post on X, Santiment has shared an update for its MVRV Opportunity & Danger Zone Divergence Model for the various altcoins in the sector. The model is based on the popular “Market Value to Realized Value (MVRV) Ratio.”

The MVRV Ratio is an on-chain indicator that basically tells us whether the investors of a cryptocurrency as a whole are holding their coins at a net profit or loss.

When the value of this metric is greater than 1, it means the average investor is holding a profit. On the other hand, it being under this threshold suggests the dominance of loss.

Historically, holder profitability is something that has tended to have an effect on the prices of digital assets. Whenever the investors are in large profits, they can become tempted to sell their coins in order to realize the piled-up gains. This can impede bullish momentum and result in a top for the price.

Similarly, holders being significantly underwater results in market conditions where profit-takers have run out, thus allowing for the cryptocurrency to reach a bottom.

Santiment’s MVRV Opportunity & Danger Zone Divergence Model exploits these facts in order to define buy and sell zones for the altcoins. The model calculates the divergence of the MVRV Ratio on various timeframes (30 days, 90 days, and 6 months) to find whether an asset is inside one of these zones or not.

Here is the chart shared by the analytics firm that shows how the different altcoins are currently looking based on this model:

Looks like most of the sector is currently in the buy region | Source: Santiment on X

In this model, a value greater than zero suggests average trader returns are negative for that timeframe and that below it is positive. This is the opposite orientation of what it’s like in the MVRV Ratio, with the zero level taking the role of the 1 mark from the indicator.

From the graph, it’s visible that almost all of the altcoins have their MVRV divergence greater than zero on the different timeframes. Out of these, most of them have their mid-term MVRV divergence greater than 1. The opportunity zone mentioned earlier lies beyond this mark, so the model is currently showing a buy signal for the majority of the altcoins.

The average negative returns have come for these coins as the market has been in turmoil following the news related to tariffs. While the model may be showing a buy signal for the altcoins, it’s possible that this uncertainty will continue to haunt the market. As Santiment explains,

If and when a global tariff solution is reached, it would undoubtedly trigger a very rapid cryptocurrency recovery,” notes  However, this is currently a very big “if” based on the latest media coverage on what is quickly being referred to as a full-fledged “trade war” between the US and the majority of the world.

BTC Price

At the time of writing, Bitcoin is floating around $76,900, down more than 9% in the last seven days.

The price of the coin has already erased its attempt at recovery | Source: BTCUSDT on TradingView

Featured image from Dall-E, Santiment.net, chart from TradingView.com

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