There have been multiple predictions about the upcoming altcoin season in 2025. However, so far, none of these predictions have come true. Has the altcoin season ended before it even began?
Although the peak season for altcoins has been delayed, it has not completely ended.
What is hindering the arrival of the altcoin season in 2025?
Bitcoin is currently at the forefront of the cryptocurrency cycle, with its market dominance (BTC.D) steadily rising. In May, its market dominance reached 65.3%, the highest level since 2021. Although BTC.D saw a slight decline in the middle of the month, it has since rebounded, reaching 63.1% at the time of writing.
Meanwhile, the price of BTC has also surged significantly, setting a record high of $111,970 last month. Historically, the peak season for altcoins usually follows a strong increase in Bitcoin, as funds begin to flow into smaller cryptocurrencies.
Although some cryptocurrencies have shown strong increases recently, most of these rallies are isolated. Additionally, Coinglass data shows that the altcoin season index is currently only 16.
This raises concerns about why the pattern of capital flows has not been replicated. Institutional investors are primarily driving the current Bitcoin bull market, and they show little interest in altcoins.
BTC remains the mainstream trading variety. As long as market sentiment continues to regard Bitcoin as a safe haven, funds flowing into altcoins will be limited. Additionally, structural risks such as smart contract vulnerabilities, legal uncertainties, and operational errors have also reduced the appeal of altcoins to outside capital.
Some meme coins have performed exceptionally well during short-term 'surges'. However, macroeconomic instability, declining liquidity, and an increasing trend of 'surfing' short-term rather than holding altcoins long-term hinder large-scale capital flows.
Many now believe that traditional altcoin models have structural flaws due to their high centralization and reliance on team execution risks.
Bitcoin's growth is largely driven by institutional investment and clearer regulation of spot ETFs.
ETF trading volume has attracted liquidity towards Bitcoin, increasing Bitcoin's share in total market depth and reducing the liquidity of altcoins. This has led to wider bid-ask spreads, reducing the appeal of making large investments in small assets and further solidifying Bitcoin's dominance.
Spot ETFs allow investors to directly invest in BTC. In previous cycles, altcoins served as alternatives. Now, as institutional investors continue to accumulate BTC, the timeline has almost reset. Meanwhile, retail investors remain cautious after the deleveraging phase in 2022-2023.
The wave of new token issuance is another important factor.
This dilutes capital and investor attention.
Liquidity is currently sparse, with 98% of the total market cap still locked in the top 100 tokens, meaning little funding is flowing into new projects. Low conversion costs make it easy for traders to be attracted by momentary hype, while many founders prioritize quick price increases of tokens over building sustainable utility, which is crucial for driving widespread and sustained capital flow.
Why the altcoin season in 2025 may still become a reality
Despite the above factors, the altcoin season still has potential. The current situation suggests that the peak season for altcoins has merely been postponed, not disappeared.
Bitcoin's current excellent performance may continue in the short term. After the end of the quantitative tightening (QT) cycle and the restart of a new round of quantitative easing (QE) policies, altcoins may usher in a revival. It makes more sense to hold off on purchases. Historically, when Bitcoin's price stabilizes in a certain range, risk appetite turns to external assets.
As demand for ETFs stabilizes and Bitcoin's volatility decreases, capital flows typically shift towards more volatile assets.
Therefore, an altcoin season at the end of 2025 or the beginning of 2026 is possible.
Signs of an altcoin season have begun to emerge.
The stark contrast in ETF fund flows is one of the most apparent signs that the market is beginning to rotate capital. Despite macroeconomic and geopolitical turmoil, Ethereum ETFs have recorded fund inflows for 11 consecutive days, totaling over $630 million. Meanwhile, Bitcoin ETFs have seen fund outflows for three consecutive days, with total outflows exceeding $1.2 billion.
The increase in the number of altcoin ETF applications, as well as some companies adopting altcoin reserve strategies in their treasuries. This indicates that as the market cycle continues to evolve, institutional investors are increasingly interested in Bitcoin alternatives.
In the current market cycle, ETH is clearly leading the rotation of altcoins and the flow of capital into altcoins, with other currencies like XMR, ENA, HYPE, AAVE, and ARB following closely, all rising over 5%, while BTC only rose 0.6% during the recovery on Tuesday.
Moreover, Bitcoin's consolidation at higher price levels often creates performance space for altcoins, especially when risk appetite increases and investors start seeking higher beta opportunities. Given that Bitcoin has stabilized above $100,000 for 25 consecutive days, a true altcoin season may be imminent.
If the current momentum of altcoins continues and institutional interest increases, we may see a strong breakout in altcoins in the coming weeks.
