Bitcoin triumphantly formed a series of fresh record highs last week, eventually topping out just shy of $124,000 as profit taking emerged. The rise has paved the way for what many are describing as the latest “altcoin season,” which involves crypto tokens other than bitcoin making often exponential moves to the upside.
The recent bitcoin bull market has just been that: a bitcoin bull market with altcoins taking the back seat as institutions rallied around spot bitcoin ETFs and BTC-based treasuries.
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But there has been a change in behavior this week. Several altcoins have posted gains of between 50% and 80% as capital begins to flow from the world’s dominant crypto to more speculative bets.
Ether had a good week on the back of a wave of institutional interest, rising by 23.3% compared to bitcoin’s 9.3% gain. Other layer-1 blockchains like SEI and SUI also performed well, increasing by 41% and 36%, respectively.
Altcoin seasons in previous bull markets have been a culmination of euphoria, speculative and viral moves often led by crypto influencers and celebrities. This time around it appears more precise and surgical, altcoins tied to projects with a lot of activity like SUI are the tokens moving.
The data is also showing early signs of an altcoin season, CryptoQuant’s MRVR-based altcoin season indicator has ticked into altcoin season for consecutive weeks for the first time since June 2024, indicating a shift in momentum.
MVRV shows the market value’s relative position to BTC and ETH, during previous bullish cycles the indicator was in an altcoin season for months at a time.
Furthermore, the meme coin dominance chart has been on a significant downtrend since the turn of the year after botched meme coins issued by U.S. President Donald Trump and First Lady Melania Trump.
The shift away from meme coins suggest that the this period of the cycle may be categorized by tokens tied to projects with merit rising as opposed to speculative high and euphoria.
CoinDesk’s CD20 index has also outperformed the CD5 index, the latter of which just considers BTC, ETH, XRP, SOL and ADA while the CD20 includes more altcoins, further demonstrating a transition into a bullish market for altcoins.
CoinMarketCap’s altcoin season barometer has also ticked up to 36 out of 100, a level seen just once in the past 90 days.
The altcoin market is still heavily reliant on BTC. If bitcoin continues to consolidate above prior record highs at $112,000, altcoins are primed for a continued move to the upside.
However, if bitcoin continues its ascent into unchartered territories, or if it breaks below $112,00, the altcoin market will underperform against BTC.
This is because altcoins lack sufficient liquidity to deal with major price swings and if BTC continues to move to the upside, capital will be allocated to chasing that rally while altcoins take a back seat.