Many experts have predicted the return of a long-awaited altcoin season. A declining share of Bitcoin dominance and sporadic outperformance in select altcoins have pointed to a subtle rotation into smaller, higher-risk assets, amidst growing appetite for the market.
A recent report, however, casts doubt on the sustainability of an altcoin rally.
Matrixport warned that it may once again fizzle out. Analyst Markus Thielen noted that, despite recurring calls for a new bull market, only two brief altcoin surges have occurred in recent memory.
In fact, the most notable was in Q4 2024. These rallies, which saw temporary spikes in funding rates, lacked underlying fundamental support, which led to rapid reversals.
As such, Thielen argued the current move mirrors previous patterns, with declining funding rates indicating that enthusiasm has already faded. The analyst added that the altcoin market remains structurally weak, and investors hoping for steady upside may be disappointed yet again.
This comes as Bitcoin’s dominance briefly slipped near 60% which has historically preceded full altcoin seasons, where these tokens outperform BTC significantly. Certain data also pointed toward capital rotation, which further strengthened the narratives of an altseason.
SwissBlock’s “Altcoin Vector” reported that the altcoin market is transitioning toward a potential breakout zone. It said that “smart capital” is rotating into positions before retail traders notice the shift.
They highlighted that while momentum and market structure are improving, this is not yet a breakout; instead, it’s an early stage where informed investors begin pre-positioning for a possible future rally. This phase can offer strategic entry opportunities before broader market sentiment turns bullish and prices accelerate.
Another market watcher argued that an altseason may soon begin based on USDT dominance, which has been stuck in a descending triangle pattern for nearly two years and now appears close to breaking down. A decline in USDT dominance typically suggests that traders are moving capital out of stablecoins and into riskier assets like altcoins, thereby fueling broad altcoin rallies.
As such, the market action seen so far has only been a warm-up, and a decisive breakdown in USDT dominance would trigger a strong shift of liquidity into altcoins, which could potentially spark a major altcoin bull run.