Market chatter about a potential altcoin season is intensifying as Bitcoin's price stalls near $87,000 and its market dominance shows signs of weakening. Key metrics indicate a shift may be underway, with Bitcoin's dominance dropping from 64.3% in May to approximately 59% currently. Concurrently, Ethereum's dominance has risen from 7.3% to nearly 12%, a move historically seen as a bridge for capital to flow into other altcoins.
The Altcoin Season Index shows many altcoins are beginning to outperform Bitcoin, even on days of broader market declines—a pattern reminiscent of the quiet accumulation phases before major rallies in 2019 and 2020. Analysts note that Bitcoin does not need to crash for altcoins to rally; a period of sideways or calm price action has often preceded altcoin breakouts in past cycles.
Macroeconomic factors are also under scrutiny as a potential catalyst. Traders are closely watching the U.S. Federal Reserve for signals it may end its quantitative tightening (QT) program. A halt to QT would increase liquidity in the financial system, a scenario that in 2020 preceded altcoin rallies exceeding 1,000%. While not a guarantee, the current environment draws parallels.
If a rotation occurs, analysts expect it to be staggered. Major cryptocurrencies like Ethereum (ETH), Solana (SOL), and Toncoin (TON) would likely lead the move, followed by mid-cap and finally small-cap tokens. Some projections suggest altcoin dominance could potentially reach 25% in 2026, which would mark the strongest shift since 2017. However, macro investor Raoul Pal cautions traders to remain disciplined, advising a portfolio anchored in Bitcoin and Ethereum with only a small allocation to higher-risk altcoins.
In summary, while not yet confirmed, several technical and on-chain pieces are aligning, suggesting the market may be entering a watch zone where conditions are shifting from decline to potential accumulation for altcoins.
