The U.S. economy has started to shrink, raising concerns about a possible recession and increasing the chances that the Federal Reserve might hit pause on its interest rate hikes. Meanwhile, inflation appears to be easing—especially with energy prices dropping—making the market outlook better for riskier investments.

Bitcoin's market dominance is currently at a high point in this cycle. That often suggests an altcoin season could be on the horizon, especially if the Fed changes its monetary policy approach. So far, markets haven't reacted too strongly to the negative GDP news, likely because investors had already anticipated it.

All eyes are now on the upcoming FOMC meeting on May 7. If the Fed decides to stop its tightening measures, altcoins could finally have the opportunity to gain momentum after a long dry spell. The conditions for an altcoin rally are starting to align.

Also worth noting: in April, the U.S. added 177,000 new nonfarm jobs, beating the expected 130,000. A strong job market like this means the Fed won’t be in a rush to cut interest rates too quickly.