Bitcoin (BTC) set a new historical record again in July 2025, with prices briefly surpassing the $123,000 mark. However, a subtle yet crucial change is attracting market attention: Bitcoin’s dominance (BTC.D) has fallen from a recent high of 66% to 64.5%, marking the largest drop since May.
Under the dazzling light of Bitcoin, the altcoins that have been silent for a long time are quietly waking up. Stellar (XLM) surged 82% in a week, Cardano (ADA) rose nearly 30%, Ripple (XRP) increased by 29%, and Dogecoin (DOGE) also recorded an 18% increase.
Bitcoin’s Dominance Erodes
The upward trajectory of Bitcoin can be described as epic. In July 2025, Bitcoin not only broke its previous high but also soared to $123,000, setting a new all-time high (ATH). This breakthrough greatly boosted market confidence and attracted the attention of a large amount of institutional and retail capital.
However, beneath the surface of new price highs, the market structure is quietly changing. The Bitcoin dominance index has dropped from 66% to 64.5%, marking the largest decline since May.
What is more intriguing is that on the day Bitcoin hit a new high of $111,000 (July 9), its dominance continued to decline. This indicates that the direction of capital flows has begun to diverge, and Bitcoin’s luster no longer completely overshadows other crypto assets.
Exchange data further corroborates this structural shift. CryptoQuant analyst oinonen_t pointed out that the reserves of USDT and USDC on Binance remain high, totaling over $31 billion.
At the same time, the Bitcoin balance in the exchange is decreasing. A large amount of stablecoins is piling up like “gunpowder,” seemingly ready to ignite the market.
The market shows early signs of rotation.
As Bitcoin hits new highs, capital within the crypto market begins to be reallocated. Long-silent veteran altcoins collectively experience an explosion. Among the top 20 crypto assets by market capitalization, several “veteran” projects stand out exceptionally.
Among them, Stellar (XLM) leads with a weekly increase of 82%, Cardano (ADA) rises nearly 30%, Ripple (XRP) increases by 29%, and Dogecoin (DOGE) rises by 18%. These established projects once again become targets for capital inflow due to their strong community foundations and market recognition.
Not only are established coins performing actively, but emerging tokens are also experiencing strong upward momentum. The weekly gains for the Layer 1 project Sei (SEI), which focuses on decentralized exchanges (DEX), and the synthetic dollar protocol Ethena (ENA) have both exceeded 30%.
Delphi Digital’s research report reveals a deeper trend: since January 2025, the overall performance of established tokens that have experienced multiple bull and bear cycles has even surpassed that of the highly sought-after AI and DePIN (Decentralized Physical Infrastructure Network) concept tokens at that time.
The widespread rise of established altcoins is seen by the market as an early signal of retail capital returning. These tokens typically represent cryptocurrencies that have been present in the market for a longer time and have a larger market capitalization, and their activity often reflects the enthusiasm and risk appetite of retail participants.
Is the alt season really here?
The key indicator for measuring the altcoin season is the CMC Altcoin Index. This index stipulates that when stablecoins and wrapped tokens are excluded, at least 75% of the top 100 altcoins must have outperformed Bitcoin over the past 90 days in order to be considered officially in the “altcoin season.”
Currently, the index stands at 32/100, indicating a significant gap from the threshold of 75. However, positive changes are occurring—this index has risen from 26 points a week ago to 32 points, suggesting early signs of capital rotation have quietly emerged.
Analysts have put forward an intriguing point: the TOTAL3 chart tracking the market cap of cryptocurrencies excluding BTC and ETH is entering the “Banana Zone 2.0”.
This usually means that a round of explosive breakthroughs is about to come. MerlijnTrader predicts that the upcoming market will be “bigger, faster, and supported by real-world use cases and huge funding” compared to 2020.
Analysts have significant disagreements about when the alt season will arrive. An analyst known as Master of Crypto believes that:
“If BTC.D breaks below the 50-day Exponential Moving Average (EMA), we might see a small altcoin season; if it breaks above the 200-day EMA, then get ready for a large altcoin season.”
But another viewpoint is completely different: “The conditions for the alt season to start have not yet been met.” According to historical models, Bitcoin needs to reach the range of $120,000 to $150,000 to potentially trigger the alt season, while the current expectations have been further pushed back to the $200,000 mark.
Long-term cycle analyst Benjamin Cowen offers a different perspective: Bitcoin’s dominance may rise again in late October 2025, continuing its historical supercycle pattern.
New Narratives and New Capital
Compared to previous cycles, the current market environment is fundamentally different. Arthur Hayes has recently made a significant shift in his stance. After Bitcoin confirmed a breakout above its historical high, he declared, “Get ready for a wild alt season.”
What supports the rise of altcoins is not only sentiment, but also the resonance of multiple fundamental and technical factors:
The compliance channel opens the institutional gate: The US spot Bitcoin and Ethereum ETFs provide a compliant entry point for institutional funds. When these funds first flow into mainstream coins, some capital may spill over into high-potential altcoins.
The evolution of technology creates an application foundation: Layer 2 (L2) technology significantly enhances the scalability of public chains like Ethereum and reduces transaction costs, providing fundamental support for more applications to be implemented.
New value narratives emerge: the integration of artificial intelligence (AI) and blockchain, the tokenization of real-world assets (RWA), and the improvement of infrastructure for blockchain games inject new stories and fundamental support for altcoins.
Technical indicators suggest rotation: Analysts have observed key reversal signals in the XRP/BTC and ETH/BTC trading pairs. The ETH/BTC weekly chart is forming a rounded bottom pattern, indicating that Ethereum may recover from long-term undervaluation.
Investor Strategy: Finding Opportunities Amid Uncertainty
In the face of the potential upcoming alt season, investors need to balance opportunities and risks:
Pay attention to the key support level of Bitcoin. Analyst Michael van de Poppe emphasized that if Bitcoin can stabilize above $110,000, it will bolster traders’ confidence and encourage more funds to flow into altcoins. This position is an important anchor point for market sentiment.
Be cautious of the changes in the alt season index. Although the current index is only 32, its continuous upward trend is worth close attention. If this index breaks through 50, it may indicate that a broader altcoin market is forming.
Pay attention to the “gunpowder” effect of stablecoin reserves. The exchange holds over $31 billion in stablecoin reserves, which is potential purchasing power. Once market sentiment further heats up, these funds may quickly flow into the high volatility and high growth potential altcoin sector.
Diversified allocation to avoid single bets. In the context where Bitcoin may maintain high-level fluctuations, appropriately allocating to fundamentally solid altcoins (such as strong-performing L1 veteran projects or emerging tokens with real use cases) is a strategic choice for balancing the portfolio.
Future Outlook
crypto analyst Satori observed that when Bitcoin price When stability or moderate increases occur, the decline in its dominance often indicates that funds begin to rotate into altcoins. This pattern was clearly evident in the cycles of 2017 and 2021.
Hayes announced after Bitcoin broke new highs: “Get ready for a wild alt season.” Institutional capital is flooding in through spot ETFs, Layer 2 technology is maturing, and new narratives like AI and RWA are emerging, all of which constitute the deep support for the upcoming altcoin explosion.
The market always moves forward in doubt. Whether this round is a short-term rebound or the beginning of a full alt season, the massive reserves of stablecoins accumulated after Bitcoin’s new highs and the shift in investor risk appetite have laid the groundwork for the next chapter of the crypto market.
