The stability of the market capitalization structure and the emergence of bullish reversal indicators create ideal conditions for liquidity rotation across the crypto industry. This situation is further evidenced by the possibility that Bitcoin’s dominance may be weakening.
Both technical signals and market sentiment suggest that a new altseason cycle is forming and could be setting the stage for the next major altcoin market breakout.
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Market recovery and the end of the accumulation phase
After months of correction, the global cryptocurrency market is showing clear signs of revival. According to CoinGecko, the market capitalization has once again reached USD 4 trillion, marking a significant recovery from a long period of stagnation. But investors’ attention is no longer solely focused on Bitcoin (BTC). The spotlight is gradually shifting to altcoins, digital assets beyond Bitcoin and often seen as leverage for the next step in the market.
As highlighted by analyst Michael Van de Poppe, the altcoin market has endured its longest bear cycle, lasting nearly four years, with sustained declines against Bitcoin. However, current technical indicators show striking similarities to late 2019 and early 2020, the period just before the market entered a strong uptrend. Specifically, the MACD is forming a bullish divergence. The RSI is hovering in the oversold zone, suggesting that selling pressure has dried up and a reversal is on the horizon.
On-chain data further strengthens this perspective. Analysts at X noted that the altcoin’s monthly market capitalization structure remains intact, suggesting that the accumulation phase is uninterrupted. The so-called “manipulation phase” in which whales and financial institutions drive out retail investors may be over, paving the way for a broader recovery.
Another analyst notes that the market appears to be repeating the same sentiment cycle as in 2021, when most investors doubted altseason would return, just before altcoins exploded in the coming weeks. Such a pattern indicates that a breakout in the altcoin market could catch the majority by surprise once again.
Bitcoin dominance and liquidity shift to altcoins
One of the most closely watched signals today is Bitcoin Dominance (BTC.D), a ratio that measures Bitcoin’s share of the overall cryptocurrency market.
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According to Seth, BTC.D is currently retesting around 59% of the Ichimoku Kinko Hyo, a key resistance zone that was a turning point in past market cycles. If Bitcoin’s dominance is denied at this level, it could trigger a massive rotation of liquidity from Bitcoin to altcoins and begin the long-anticipated altseason.
Further analysis by DamiDefi adds that the strongest confirmation of an upcoming altcoin breakout will occur if ETH/BTC breaks above 0.041 and BTC.D closes below 57% on the monthly chart. These metrics indicate that investors are starting to prefer holding altcoins over Bitcoin, the classic bellwether of every major altseason. Both indicators are nearing critical levels, suggesting that market tensions may soon be released.
In parallel, the TOTAL2 chart, which represents the total altcoin market capitalization excluding Bitcoin, shows that the price is testing an eight-year uptrend line dating back to 2017 that served as strong support during the 2018 and 2020 crashes. Holding this structure could be the starting point for a broader altcoin market breakout in the coming months.
Another analyst commented on X: “Now is not the time to be bearish on alternatives. We have a legendary few months ahead of us in this market. Timing is always difficult, but I think we are getting close.”
Meanwhile, the Altcoin Season Index, which measures the relative performance of altcoins against Bitcoin, remains near the same lows as the bottom of the 2022 bear market. This indicates that investor sentiment towards altcoins is currently in “wait and see” mode. Still, any strong trigger can trigger a wave of FOMO (fear of missing out) similar to previous cycles.
