At the time of writing these words, the entire cryptocurrency market is waiting for altcoin season. This one is still not coming, although there are some signals that may suggest that we are close to strong increases.
What is altcoin season?
Let's start in standard fashion: by explaining what altcoin season is. It's a period in the cryptocurrency market in which altcoins - that is, all cryptocurrencies except bitcoin - start to price more strongly than BTC itself. In other words, it's a bull market for altcoins - capital then shifts out of expensive bitcoin and into the altcoin field. This follows from the logic of investors: since bitcoin has already become quite expensive and can be said to be expensive for the current stage of the cycle, it makes sense to look for cheaper alternatives that can give us a higher rate of return.
How to start that altcoin season is coming?
Well, just from the above description you can deduce how to recognize that the “alta season” is approaching. It is enough to follow a few phenomena. Thus, for example, the declining dominance of bitcoin can mean that the market is slowly beginning to consider BTC expensive. In practice, it's an indicator that shows us how big bitcoin's share of the total cryptocurrency market capitalization is. The larger it is, the less capital for altcoins. When the dominance falls below the 50% level and continues to decline, it can mean that investors begin to shift capital to the altcoin market. However, the persistence of the ceiling above 50% suggests the opposite - BTC's position remains strong and altcoins may struggle to register larger increases.
Consequently, it is worth watching what is happening in the altcoin market: whether you see an increase in altcoin trading volumes, whether those in pairs with BTC are increasing. ETH/BTC can be a good indicator here. As the history of the cryptocurrency market shows, it is the bull market in ether that starts strong increases on the charts of alternative coins. Currently, the ETH/BTC pair is showing considerable weakness, so on this basis altcoin investors have grounds for concern. However, another factor, which we will now discuss, should pour more hope into their hearts.
In the cryptocurrency market, it is increasingly important what the big players are doing - if institutional investors start buying up a stock, it may suggest to us that we are in for a bull market in its market. This phenomenon can already be seen in the ETH field. The charts that allow us to track what the owners of portfolios that have a few thousand Ether each are doing show that whales are buying ETH. ETH ETFs are also starting to swell from capital. Trump's World Liberty Financial is also arming itself in Ether.
So we have two indicators discussed: one shows that bitcoin continues to take away oxygen from altcoins, but the other shows the opposite: the market is slowly preparing for altcoin season. So it's worth looking at another issue: stock market sentiment. Growth in altcoins - risky assets notwithstanding - should be accompanied by very good market sentiment. So far, however, the fear and greed indices show a neutral attitude toward cryptocurrencies. This index also suggests that we are in a period of breakthrough. Although it does not answer the question of whether this breakthrough means a bull market or, however, a bull market.
Cyclicality should theoretically be in favor of growth. So far, the first quarter of the pohalving year has been a time of strong increases for ether, which started the altcoin season. Only that - so far - is not the case. ETH lost heavily in early February, landing at $2080, and while the cryptocurrency's price quickly rebounded and is back above $2600, it is not rising as it has in previous cycles. Why? Here we come to the key issue: the cryptocurrency market has become too accustomed to cyclicality, and has misunderstood it for years. Today, there are many indications that altcoins are simply dependent on US politics.
US authorities will decide the fate of altcoins!
In the previous two cycles - 2016-2017 and 2020-2021 - ether behaved almost twinned. Now, however, it is different: theoretically, it should already be rising strongly, as should other altcoins. This is not the case. Why?
The current cycle shows us that cryptocurrencies are actually heavily dependent on the policies of central banks. Loose monetary policy (low interest rates) and quantitative easing (increasing the Fed's balance sheet, i.e. adding dollars) favor risky assets, including cryptocurrencies.
Why such a thesis? One only needs to superimpose the chart of ETH/BTC and the Fed's balance sheet to see that ether has so far started to rise strongly when the US central bank turns on printing. Now Jerome Powell, who heads the Fed, says that the institution he manages will hold off on quantitative easing, while not intending to rush to cut interest rates.
Rate policy is another element that affects altcoins. The Fed's goal is to fight inflation, the rise of which prompts the central bank to raise interest rates. Currently, we are seeing the rate of increase in the prices of products and services rising, which makes Federal Reserve officials rather reluctant to cut rates. So, are we in for a disappointment on this front and will Ether and other altcoins fail to show us their potential. Not necessarily, either. Indeed, there is an alternative scenario in which even without Fed interference we will see altcoin season.
The issue is the Treasury General Account (TGA), the government's account at the Fed, the US government's account at the central bank. Its level is falling, and the authorities, in order to govern, need money. So we are in danger of a repeat of the conflict in Congress over the debt limit. If the TGA level continues to fall, it will somehow offset the disastrous quantitative tightening policy for altcoins, which the Fed is behind. The central bank is currently shrinking its balance sheet, which means it is “sucking” dollars from the market. The government is doing the opposite. This alone could give a boost to altcoin increases. After all, the whole game is about raising liquidity in the financial system.
On top of that, a weakening dollar, which we are also currently seeing, would be useful for altcoin growth.
And finally, growth could be fueled by regulation of the cryptocurrency market in the US. Donald Trump has appointed a special team to draft regulations for the digital asset market. The announcement of these could also fuel further increases.
Pending narrative
Finally, we left the last topic, which can both foreshadow the altcoin season and hint to investors what they should invest in soon (assuming altcoin season is coming).
Each altcoin season has been associated with some narrative and new trends. In 2017, it was the vogue for Initial Coin Offering (ICO), or token issues. In 2020-2021, the market invested in DeFi projects and in NFT.
Any attentive investor should try to answer the question of what narrative might dominate in 2025. The memecoin bull market is behind us, benefiting Solana, a network that has been minting such tokens en masse. Nowadays, more and more speculation can be seen in the media about which cryptocurrency will receive its ETF next. In addition, there is increasing talk of tokenization of assets. In the case of ETFs, the matter is clear: those cryptocurrencies whose funds will appear on the market, or whose funds will record significant revenues (the latter are beginning to be seen in the case of Ether ETFs), will gain in value.
As for the tokenization market, projects that enable tokenization can gain in value. In this field, it is worth mentioning Ethereum, which today is the most secure blockchain that is suitable for tokenization.
Summary
The altcoin season does not start suddenly. Its start is heralded by specific macroeconomic indicators, Fed policy and media narratives. During periods such as the current one, it is crucial for investors to keep an eye on factors such as the falling/growing dominance of BTC, the Fed's monetary policy and investor sentiment. It is possible that as this article is being written, we are very close to the start of the altcoin bull market.
