The cryptocurrency market faces uncertainty regarding an impending altcoin season despite recent capital inflows into smaller-cap altcoins. According to CoinGlass data, the Altcoin Seasonal Index - which measures altcoin performance against Bitcoin on a 0-100 scale - dropped sharply from 59 to 41 within days, signaling weakened momentum. Coinbase Head of Research David Duong noted that while the altcoin market (excluding stablecoins) nearly doubled since April 2025, this week's pullback stemmed from excessive risk-taking in leveraged altcoin positions.
The Altcoin Open Interest Dominance ratio reached 1.6, historically a precursor to market corrections. Duong warned this metric must decrease to signal healthy deleveraging, otherwise volatility could intensify. Crucially, Bitcoin Dominance fell below its 200-day moving average for the first time since January 2025. A sustained position below this level would confirm altcoin season conditions, reminiscent of 2021 patterns, though Duong advises waiting for multiple closes below the threshold before confirmation.
Supporting this analysis, CoinMarketCap's Altcoin Season Index registered at 43 on July 26 - a six-point daily increase but still solidly in Bitcoin Season territory. The index requires 75% of top-100 cryptocurrencies (excluding stablecoins and wrapped tokens) to outperform Bitcoin over 90 days to signal altcoin season, whereas current readings show fewer than 25% achieving this benchmark.