Key Points
- Altcoin season shows signs of momentum as BTC dominance decreases.
- Analytics firm Swissblock predicts the first phase of altcoin season may be approaching.
BTC dominance has seen a dip, suggesting a potential build-up of upside momentum for the altcoin season. Although the altcoin season index reading still indicates a BTC season, this could change.
In May, the altcoin market experienced a significant boost due to a risk-on sentiment, especially after Bitcoin (BTC) surged above $100K last week. Swissblock, an analytics firm, has noted that this building momentum might signal the first phase of the incoming altcoin season.
Altcoin Momentum on the Rise
Swissblock stated, “First leg of Altseason incoming. Last time we got this confirmation was February and November of 2024.” The attached chart shows an uptick in positive altcoin impulse, a trend that was observed in the altcoin run-ups of February and November 2024.
Crypto analyst Benjamin Cowen agreed with Swissblock’s outlook, noting an increasing number of altcoins above the 100-day Simple Moving Average (SMA) from a price chart perspective.
In early May, Bitcoin dominance hit a cycle high of 65.3%, slowing the broader altcoin sector’s April recovery. However, the recent surge in BTC above $100K was accompanied by a sharp 4% drop in BTC dominance to 62%.
Signs of Capital Rotation from BTC
Furthermore, Tether’s USDT dominance has declined from 6% to 4.5% in the past three weeks, indicating some capital rotation from BTC to the altcoin sector. This was confirmed by a rebound in the altcoin market cap, excluding BTC and Ethereum (ETH), from over $600 billion to over $900 billion.
Last November’s altcoin pump showed similar signals — a sharp drop in BTC and USDT dominance. If this trend repeats, Swissblock’s outlook could be validated.
Despite these signs, it is still a firm BTC season as of the time of writing, according to the Altcoin Season Index (ASI) reading of 27. The ASI is a lagging indicator, tracking BTC’s performance against altcoins over the past 90 days.
However, some altcoins like Monero [XMR], Sui [SUI], Bittensor [TAO], and Tron [TRX] have outperformed BTC in the same period. Since April, altcoin season momentum has increased, but not all altcoins will perform equally. Concentrating on sub-sector leaders with strong fundamentals could improve positioning.
