With market capitalization reaching $4 trillion and Bitcoin's dominance falling to a multi-month low, altcoin season is underway, marking a capital rotation.
Analysts suggest exiting when the altcoin season index exceeds 70, or when TOTAL3 approaches its $2 trillion target through the cup-and-handle pattern.
Key exit signals include ETH outperforming BTC, increased meme coin activity, and BTC.D falling below 50%, which usually indicates the end of the cycle.
Altcoin season is heating up, with a market capitalization of $4 trillion, and Bitcoin's dominance at a multi-month low; key exit signals include the altcoin season index and TOTAL3 targets.
Altcoin investors began taking profits in July.
Most altcoin investors who started buying in June may have already taken profits. This is because since then, the total altcoin market capitalization (TOTAL3) has risen by 44%, reaching $1.5 trillion.
Glassnode's proprietary indicators confirm that capital began rotating into altcoins starting in early July.
Glassnode's altcoin season indicator. Source: Glassnode
Glassnode reported: "Glassnode's proprietary Altseason indicator launched on July 9. This means that stablecoin supply is expanding, funds are flowing into BTC and ETH, while altcoin market capitalization is rising—creating a structurally favorable environment for capital rotation."
Today, CryptoBubbles shows the market is booming. Many altcoins have increased by 10% to 20%.
Glassnode's altcoin season indicator. Source: Glassnode
Glassnode reported: "Glassnode's proprietary Altseason indicator launched on July 9. This means that stablecoin supply is expanding, funds are flowing into BTC and ETH, while altcoin market capitalization is rising—creating a structurally favorable environment for capital rotation."
Today, CryptoBubbles shows the market is booming. Many altcoins have increased by 10% to 20%.
Altcoin price performance on July 18. Source: CryptoBubbles
However, history shows that the altcoin market at the end of 2024 ended with a significant decline. Many altcoins dropped by 50% to 90%. Many investors failed to act quickly and ended up watching their portfolios sink further into losses.
This is why determining when to take profits is as important as determining when the altcoin season begins.
Analysts suggest considering four factors to determine exit timing.
The simplest and most widely used signal is the altcoin season index. This index is typically used to identify entry points but also issues warnings for the overall market when it reaches its upper limits.
As of this writing, Coinglass reports the index at 49. When it reaches 70 to 100 points, investors are advised to take profits.
Altcoin season index. Source: Coinglass
Coinglass reported: "The altcoin quarterly index is rising, and altcoin market capitalization has surged in recent days. When the index reaches above 70, it's time to sell your altcoins, right?"
For other investors, the technical analysis of altcoin market capitalization (TOTAL3) can serve as a reference. Analysts like Peter Brandt and Greeny believe that TOTAL3 is forming a cup-and-handle pattern.
TOTAL3 cup and handle model. Source: Greeny
According to the measurement theory of this pattern, TOTAL3 may reach a target of $2 trillion. This could be a critical point for altcoin holders to consider exiting.
Some investors track capital flow cycles to determine when the market will end. For example, investor NekoZ believes the market is currently entering the second phase of a four-stage cycle.
The four-stage capital flow cycle in the cryptocurrency market. Source: NekoZ
NekoZ stated: "ETH's return has begun to outperform BTC, indicating that we have entered the second phase of altcoin season."
In this framework:
The first phase is when Bitcoin performs well.
The second phase is when Ethereum outperforms Bitcoin.
The third phase is when large altcoins rebound.
The fourth phase is when small altcoins and meme coins surge, which often marks the final phase of altcoin season.
Many observers are closely monitoring this development.
The last factor to consider is Bitcoin's dominance (BTC.D). In July, BTC.D fell from 65.5% to 61%, marking the largest monthly decline since November 2024. Analysts believe that the peak season for altcoins may last until BTC.D drops to 48% to 50%.
Bitcoin's dominance. Source: ToraX
Each investor may have their own strategy. However, historical experience shows that holding altcoins for too long often leads to losses, while Bitcoin's rebounds tend to be quicker. As the market overheats, the risks also increase.
Conclusion
The momentum of altcoin season is evident, with strong growth in market capitalization and a decline in Bitcoin dominance. Investors should closely monitor the altcoin season index, TOTAL3 patterns, and capital flows to optimize exit timing. Identifying these signals helps reduce risk and lock in profits before a potential market correction. Staying informed and disciplined is still crucial in navigating this dynamic cryptocurrency cycle.
