The Bitcoin market remains relatively stable despite a deep correction at the beginning of last week. Meanwhile, the altcoin sector is experiencing an extremely difficult period. Let's examine whether an altseason is still possible under the current market conditions.
Historical Devaluation of Altcoins
In their latest report, Glassnode analysts emphasized that macroeconomic factors are the main reason for the increased volatility in the crypto market. In particular, the dynamics of cryptocurrencies were negatively affected by the tariffs on imports of goods from Canada, Mexico, and China proposed by Donald Trump.
Geopolitical tensions have affected investor sentiment. In addition, the strengthening of the US dollar contributed to limited liquidity.
However, against the background of these events, Bitcoin demonstrated relative stability. Over the past week, the price of BTC has fluctuated in the range between $93,000 and $102,000. Experts explained this by an increase in liquidity and significant capital inflows into the main cryptocurrency market.
"The growing presence of more stable and patient holders contributed to the stability of the value of BTC even against the background of a relatively unstable macroeconomic situation," Glassnode noted.
In contrast to the stable Bitcoin, altcoins faced serious problems. Using the PCA analysis method, analysts found that most ERC-20 standard tokens were closely clustered.
The prices and movements of these cryptocurrencies in the market changed in the same direction simultaneously. This indicates that investors were massively selling altcoins at the same time. Therefore, many tokens failed to avoid general volatility and move independently of each other.
"The altcoin sector suffered the largest relative losses during the overall decline; the global market capitalization of altcoins experienced one of the largest devaluations in history," the experts explained.
In just two weeks, the capitalization of the altcoin sector decreased by $234 billion. However, in the context of the entire history of observations, this fall was not the most serious.
The situation was much worse during the "great migration of hash rate" from China in 2021 and the collapse of the LUNA stablecoin in late 2022.
Is an Altcoin Season Possible?
An analyst known in the crypto community under the nickname CryptoAmsterdam drew attention to a recurring trend in cryptocurrency cycles. He noted that Bitcoin's dominance peaks when BTC updates historical highs (ATH). During these periods, the dominance of altcoins decreases, which negatively affects investor sentiment.
Using the example of past cycles, the expert showed that after the second sharp jump in price, Bitcoin's dominance usually falls. This is followed by growth in the altcoin market.
"I still expect them to catch up with Bitcoin, I still expect Bitcoin dominance to drop and Altcoin dominance to increase," he wrote.
However, according to CryptoAmsterdam, the current cycle is much more intense due to the huge number of altcoins and the relatively small number of investors who hold BTC at higher prices. Therefore, cash flows first rush into Bitcoin, then into the main altcoins, and only after that into tokens with medium and low capitalization.
Another well-known crypto analyst pointed out that he had discovered an important signal, foreshadowing the beginning of the altseason:
"Some altcoins are decoupling from Bitcoin for the first time since 2022 — this is the first signal of the bull run! I believe we’ll see major altcoin rallies before Bitcoin is officially declared the reserve currency. Profits from BTC will likely flow into altcoins, kicking off the real altseason," he noted.
Looking ahead, the future of altcoins will depend on investor sentiment and market dynamics. If historical trends continue, 2025 could be a crucial year for altcoins, especially if profits from Bitcoin start to flow into this sector.
